As an investor, the biggest and most expensive investment is not the intellectual property, idea or product. It’s the inventor!
Most entrepreneurs/inventors will promise you anything! They have been coached to tell you the right stories and will express a great interest in learning from you. The fact is, many see the bright shiny object called business ownership and using someone else’s money as their answer. They fail to understand the money that has been invested may need to be repaid and that debt can limit future endeavors. However, it will become your issue if you decide to invest in them and they are not ready.
How can you tell if the person you’re investing in is really the one that can make you money? Most investors buy an idea. The challenge can be the inventor comes along as a key element in the investment. As the investor, you need a way to determine whether or not the inventor has the enterprising interests or capabilities to setup and run a company. And, the willingness and ability to follow your directions!
When push comes to shove in any investor-inventor relationship (and, it will), many will push back and fail to follow-through. The problem is natural entrepreneurs, whether they have experience or not, don’t take well to being told what to do, how to do it, or be held accountable for the intended results that are not their ideas.
They generally are not coachable – they falsely believe if they can envision it, it will happen. They are often unaware of the focused actions required and how to be resourceful outside of themselves. Their lack of hands-on experience and business knowledge can limit the successful launch of the product/idea and your profitability.
People are like icebergs. You only see about 10% of their skills, experience and education. The rest of the iceberg becomes known after you’ve invested in them. By then, it may be too late to recoup your money.
What can you do to ensure you’re picking the right people to invest in? Know the person. Yes, it’s their idea that you are buying. They’ve probably invested their entire life savings, have second or third mortgages and received money from their parents, friends and other family members! They truly believe in their idea. However, consider this:
- Did they use a strategic process to create it?
- Do they have the mental engine to create a company?
- Do they have the willingness to follow your lead and work collaboratively with you?
These are only three of the many questions that need to be asked and answered before you invest in them.
Discover the other 90% by using scientifically qualified assessments that will provide objective information about his or her learning style, core behaviors and occupational interests. It will open your eyes (and, usually theirs) about what type of entrepreneur, and future business owner, they will be.
- Can the person create and build a company?
- Will they work in a win-win manner beyond verbally agreeing with you and their new Board of Directors (or Advisory Board)?
- Are the results they produce the intended ones?
- Were they able to produce them on-time and within budget?
- Does the leader have the mental engine to grow a financially successful business?
- Do they even have the interest and discipline to do so?
As an investor, you will save a lot of time, energy and money knowing up front the type of inventor you are investing in – because, again, she or he can either be your biggest investment or your greatest expense.
©Jeannette Seibly, 2015
It can be lonely at the top! An experienced business advisor, always accessible and at a nearby desk can make a positive and powerful difference for you, and your employees. My goal is to be your in-house advisor, your ally and sounding board as you navigate the complex world of your business! (Contact: JLSeibly@SeibCo.com OR 303-917-2993)