If you watch business shows on TV either Shark’s Tank or Dragon’s Den you will have seen Robert Herjavec sitting on chair 5 and offering good advice and sometimes offering money. Mr. Herjavec was written a book called Driven – How to Succeed in Business and in Life published by HarperCollins Publishers, Toronto, 2010.

Chapter 22 Don’t Bank on the Banks

Business does not get done without credit. Banks love to market themselves as your partner in business, if you are profitable the image works. If you are not making a profit, you must remember the bank is there to lend you money to be repaid, not to be a venture capitalist or business partner.

How to Get Financing

• Know your facts – Mr. Herjavec is amazed how little research has done by many people who seek money to fund their business. You need to know your cost of production, your wholesale margin, and expected retail price. Every business operates in a market, what is the size of it; is it increasing or decreasing? You need to know the facts of the business.
• You have 90 seconds – you have someone’s undivided attention for 90 seconds for them to understand your concept or idea. Your task is to seize the other person’s attention from the beginning.
• Communicate effectively – present your facts and figures in a manner that generates confidence. Watch your body language,
• Value your company realistically – the biggest obstacle encountered by pitchers is the value they place on their business.
• Understand relative value – what is the value of their business related to others in a similar field.
• Know the golden rule – a thing is only worth what someone is willing to pay for it
• The only measure of success is sales – sales are tangible proof that your vision is real.
• Define your share of the market, not the size of the market. Nobody cares if the total market is $ 10 billion what they care about is how are you going to capture a share of the market.
• Do not underestimate your role – you may believe the facts speak for themselves, they need someone to speak for them.

Chapter 24   Prepare to Wear the Black Hat Major Problems Rarely Fix Themselves

5 Serious Symptoms of Trouble

• A constant shortage of cash to pay all bills in full when they become due.
• A reliance on bank loans and overdrafts to keep the company solvent ( it is one thing to be short of cash because you are growing like crazy; quite another because you are borrowing to fund operations)
• A dramatic reduction in the owner’s income and profits.
• A constant concern about potential failure
• An inability to reduce the company’s debt position.

10 Steps Forward

• Stop the bleeding – check the cash flow
• Forget the quick fix solutions – separate short term actions with long term needs and manage them in parallel
• Do not delegate – this is the time for micromanagement on your part. The situation likely took some time to happen with the current management.
• Make a clear distinction between turnaround expenses and operating expenses.
• Do not try to hide the urgency, proclaim it.
• Manage up if necessary
• Identify and nuture your most profitable products or services – your core business
• Find the niche where you can be number one – becoming the dominant player in your market is the best way to create stability
• Know the biggest source of savings on employee salaries
• Expect to win

Linking to dividend paying stocks, while companies losing money are to not to bought, even profitable companies have lost money and if you look at companies that existed 50 years ago, few exist now. You need to watch out for the signs.

There are more questions than answers, till the next time – to raising questions.