Business Information for Entrepreneurs by an Entrepreneur

This week, I'm answering a few readers' questions.

From: Mark

“I had a question for you about venture capital. I read recently in the Los Angeles Times an article where many VC firms are ramping up their funding of high tech Internet companies once again.

Some of the companies being funded are startups, with what appears to be very little in terms of history, track record, experience and the like.

My question is, do you think it is possible that a VC firm would fund a startup with a good business plan that did not have a history, experienced management, or even an office?”

Response from Buzz:

Hi Mark!

In the tech bubble of 1999-2001, it seemed like all you needed behind your name was a “dot-com” and you became the recipient of mountains of venture capitalist (VC) money. Some companies didn't even have a business model that would earn them a profit… and they still got money! Of course, today things are very different.

I think that VCs today will continue to take risks and invest in high-tech but will be far more measured than those early days of the “Wild West” of the web. Many VCs will want to see that history or experienced management, but I suspect that some will even willingly forgo history and experienced management as long as they can identify two things: a profitable business model and a ready market… two things that the VCs of the 1999-2001 tech bubble didn't always look for.

If you are looking to get VC money, don't worry if you don't have the history or the experienced management. But make sure your business model has profit built into its forecast AND that there are real people looking to buy your product.

I hear this term a lot: “fake it till you make it”

I've heard it often as part of sales training courses. If you want to be successful, you have to pretend to be successful. After all, clients may not want to do business with you if you have no track record of success.

The challenge is when do you draw the line?

This can be an ethical challenge for some entrepreneurs who want to show that they are experienced and successful but do not have years of experience under their belts.

My advice to brand new entrepreneurs is to avoid lying — because it will become very obvious at some point while you're working with customers — but you may want to consider spinning your past experience in a different way.

For example, if you worked in customer service for a decade before starting your own business, it's not okay to say you've been working in the business for 10 years but it is okay to say that you've got a decade of customer service experience that allows you to keep your current customers happy. It becomes even easier if you have worked in the same industry that you now own a business; you can say that you have over a decade of industry experience.

And of course, you need to dress the part and make sure your website is professional looking, even if you don't have any customers yet.

Without lying, I think you CAN “fake it till you make it” but make sure that you're always honest.

Today's blog is not about software that I recommend you download but rather a useful tool you can use to build your business. It's a PDF file of “The Mackay 66”.

Designed by Harvey Mackay of well-known business books including How To Swim With The Sharks Without Being Eaten Alive and Beware The Naked Man Who Offers You His Shirt, this tool will help you build your business.

This document, found here, www.harveymackay.com/pdfs/mackay66.pdf lists the 66 questions Mackay feels will help you know your customer better than they know themselves and you can use this knowledge to help you build rapport, make the sale, and surprise them with great service.

It includes such questions as “Favorite places for lunch” and “conversation interests” and “social organizations”… 66 questions in all that will give you the edge on your competition when it comes to knowing your customers.