The Eagle Blog

Starting a Business

I had an interesting chat today with a young entrepreneur who is trying to take his company to the next level of growth. It is a small marketing and communications company with a number of individuals that have grouped together under one banner. In order to grow they feel that they need an injection of capital.

I am certainly no expert in this area, but whenever I have conversations like this it becomes apparent that after 11 years in business I certainly know more than a lot of people starting out. I relayed some of my experiences when starting Eagle, and talked about some situations that I had encountered along the way … all of which were cause for this person to think.

Here are some of the areas which seem to be a common “hurdle” or “news” to many people in that start-up phase:

1. Commitment. When asking people to invest in your venture one of the things investors inevitably will look for, is the level of commitment of the principals. Ideally investors want to see the principals so deep into this venture that failure is not an option! When we started Eagle we cashed in our RRSPs and remortgaged the house in order to have the capital needed. There is a lot of motivation in knowing that failure means starting over! I have had this conversation with many would-be entrepreneurs and it has caused several to reconsider. I don’t suggest that this is always the case, but I do believe it is the norm!

2. Talk Finance-speak! Most people starting companies are pretty good at their world, which in this case was marketing & communications, in Eagle’s case it was staffing. The person with the money wants to talk in terms of balance sheets and cash flow, projections and assets etc. It is critical that the entrepreneur can present their case in these terms. An eloquent sales presentation that talks about differentiators and messages, market share and technical superiority is probably also needed … but money guys like to talk about money. They want to know what you want and what you are offering as a return. The very first time I went to see a Venture Capitalist, when looking for financing to start Eagle, he asked me how much I was looking for … I didn’t know! Seems basic, but I’ll bet I’m not the only one who ever made that bone-head move!

3. Equity. Equity is a long term prospect, and investment money is needed up front. Sometimes there is an ability to give an investor an excellent return on their investment without having to give up too much, if any equity. My belief is that you should be sparing with the equity because as a company grows there will be plenty of opportunity to use equity as a lever to get in new blood, or merge operations with other companies etc. Of course if equity is needed to get the cash then do it!

4. The business plan. It really should be concise, but it should also encompass all of the key points of the business. I carried a little notebook with me for months and every time a new thought came I would jot it down … I still do! A business case can really demonstrate the depth of knowledge an entrepreneur has, which is comforting to investors.

5. Shareholder agreements. When the shareholders are also employees it is absolutely critical to ensure there is a clear division between their responsibilities as employees and their rights as owners. It would be very unfortunate for business discussions to be complicated by people playing the ownership card. I believe both roles need to be completely separate. I also believe that if an employee who is also an owner needs to leave the company by choice or otherwise then they should no longer be an owner. Shareholder agreements are a great topic of conversation but you need to get them right up front to avoid issues years later.

6. Leadership. The entrepreneur needs to instill confidence in any investors. In addition to all of the above they need to exude confidence and be very clear in their authority in the company. If an investor senses weakness in the leader then its not likely going to be a “horse” they will back.

I really enjoy chatting with new entrepreneurs but never have enough time for it! Starting a company is exciting, it is fulfilling, it is fraught with issues but the sense of achievement is a great feeling. Obviously it is not for the faint of heart but every now and then i meet someone who has what it takes, I think I met one today!


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10 thoughts on “Starting a Business

  1. Hello,

    Interesting article. I totally agree. I think the most difficult and “annoying” (at least, for me) it is the accounting part of the activity. I like what you said.
    I am trying to build an Entrepreneurs Investors community. Our idea is to bring to entrepreneurs advice that will help t hem in the growth process (without crawling and begging for help). They can post their needs. Most entrepreneurs are too isolated and just don’t know what to do. They also do not have all the financial resources to ask for advice. We will be honored if you can participate to our community.

    I leave you the decision to publish the address of the website (thestreetmarket.com).

    Thanks and good work!

  2. Hello,

    Interesting article. I totally agree. I think the most difficult and “annoying” (at least, for me) it is the accounting part of the activity. I like what you said.
    I am trying to build an Entrepreneurs Investors community. Our idea is to bring to entrepreneurs advice that will help t hem in the growth process (without crawling and begging for help). They can post their needs. Most entrepreneurs are too isolated and just don’t know what to do. They also do not have all the financial resources to ask for advice. We will be honored if you can participate to our community.

    I leave you the decision to publish the address of the website (thestreetmarket.com).

    Thanks and good work!

  3. Nice post. I plan on running my own business soon, so I’ll keep this in mind. I can use all the help and advice I can get since I know it’ll be tough. More recently I’ve been thinking about buying a business instead of starting one from scratch. Do you have any suggestions or advice? Thanks!

  4. Nice post. I plan on running my own business soon, so I’ll keep this in mind. I can use all the help and advice I can get since I know it’ll be tough. More recently I’ve been thinking about buying a business instead of starting one from scratch. Do you have any suggestions or advice? Thanks!

  5. This is a huge topic and certainly a quick blog entry is not going to do it justice. Here are some top of mind thoughts.

    Get advisors … accounting and legal for sure. Mentors and people who understand the business you are in, or trying to get into, are also invaluable.

    Develop a checklist of things that need to be met in order for you to buy.

    Do your due diligence on anything you buy. Don’t leap at an opportunity becasue it LOOKS good, but don’t be afraid to pull the trigger if it meets all of your criteria.

    Make a business decision NOT an emotional decision. Remember however that you do need to be passionate about this business because you will be living and breathing it all day every day.

    Surround yourself with positive people. There are ALWAYS reasons NOT to do someting, so you need positive reinforcement to make this kind of leap.

    Do a best case/worst case scenario. When we started the business for Janis and I the worst case was that if the business failed we lose everything … house, savings, car etc. However we were both very employable and both held senior management jobs before Eagle, so we could quickly replace our income and rebuild.

    Good luck!

  6. This is a huge topic and certainly a quick blog entry is not going to do it justice. Here are some top of mind thoughts.

    Get advisors … accounting and legal for sure. Mentors and people who understand the business you are in, or trying to get into, are also invaluable.

    Develop a checklist of things that need to be met in order for you to buy.

    Do your due diligence on anything you buy. Don’t leap at an opportunity becasue it LOOKS good, but don’t be afraid to pull the trigger if it meets all of your criteria.

    Make a business decision NOT an emotional decision. Remember however that you do need to be passionate about this business because you will be living and breathing it all day every day.

    Surround yourself with positive people. There are ALWAYS reasons NOT to do someting, so you need positive reinforcement to make this kind of leap.

    Do a best case/worst case scenario. When we started the business for Janis and I the worst case was that if the business failed we lose everything … house, savings, car etc. However we were both very employable and both held senior management jobs before Eagle, so we could quickly replace our income and rebuild.

    Good luck!

  7. Thanks for the help, Kevin. I really appreciate it. This is all fairly new to me despite wanting to run my own business for a while. I’m going to check out my local Chamber of Commerce soon for help and to attend meetings. I think it’ll be helpful to know what’s going on in my area. I’m keeping my options open for now, and I’m still on the fence about certain initial plans, but I did find a possible business to buy BizTrader.com and BizQuest.com. Again, it’s also just a good way for me to know what’s going on in my area. I mean, if a lot of businesses are for sale then I don’t know if I should take that as a good sign! Again, thanks. I really appreciate your advice.

  8. Thanks for the help, Kevin. I really appreciate it. This is all fairly new to me despite wanting to run my own business for a while. I’m going to check out my local Chamber of Commerce soon for help and to attend meetings. I think it’ll be helpful to know what’s going on in my area. I’m keeping my options open for now, and I’m still on the fence about certain initial plans, but I did find a possible business to buy BizTrader.com and BizQuest.com. Again, it’s also just a good way for me to know what’s going on in my area. I mean, if a lot of businesses are for sale then I don’t know if I should take that as a good sign! Again, thanks. I really appreciate your advice.

  9. Exciting times! Entrepreneurs are people who make things happen … they overcome obstacles and are action oriented people who just Get it Done. If you have a plan and work your plan then you will reach your goal. Good luck!

  10. Exciting times! Entrepreneurs are people who make things happen … they overcome obstacles and are action oriented people who just Get it Done. If you have a plan and work your plan then you will reach your goal. Good luck!

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