CHAPTER 5

Will Your Business Concept Soar?

I have watched numerous entrepreneurs lose valuable opportunities because they thought the cost of the capital was too high. They spent too much time haggling over the cost of funds while their window of opportunity moved to someone else. Obviously, you always try to attain a good deal, but important factors like the cost of capital should have been discussed prior to investor meetings and investment priorities discussed and agreed to.

Simply, if it costs you one dollar to make two dollars, are you winning or losing?

Bookstores and online e-commerce gateways are full of financial self-help books, from pure academic to highly personalized trading books. These books will assist you to understand corporate structures, financing methods, strategy, and business planning. While The Rainmaker will allude to such issues, the focus is on what structures are most conducive to making a success of your business, followed by techniques to keep the business healthy and prepared for future growth.

The following are some of the pertinent issues The Rainmaker questions:

This book is designed to be practical, while taking theory into consideration. Global statistics show that between 75 percent and 90 percent of all new businesses fail within 2 years of being launched. I believe that there is a direct link between failure and the lack of establishing a workable strategy and to carry out that strategy in a coordinated manner. The solution seems so simple: Take the opportunity to carefully plan your future to raise the chances of profit and ultimately success.

My involvement in funding businesses accelerated in 2010, when I helped raise $20 million and $150 million in two extremely different projects. The first project was to acquire a mine in Kenya, and the second was to acquire and launch a new aviation charter company in South Africa. It took less than 8 minutes to raise the funds for the purchase of the mine. The entrepreneur started his presentation, but the funder simply raised his hand and said, “I have read the business plan and supporting documents. Based on these, we agree to the proposed deal.”

The second project presentation, this time to a Chinese consortium, took place in Bangkok. That presentation took three 1-hour sessions over 3 days. On the fourth day, photographers were at the meeting to document the deal. Hands were shaken, and the transfer of funds was carried out as discussed.

These two projects did, however, give me a skewed perception of how really difficult funding truly is. The next dozen projects were not so easy, with entrepreneurs fumbling presentations, shortcuts taken by researchers, and the financials proving to be padded to increase bottom-line growth.

Many projects were not funded, and I had to take a step back to reassess my methodology. Over the following years, I developed a system that included research to support forecasts on audited financials and corporate structures that met the latest legislative guidelines and regulations.

The system worked well until 2015, when I had to reassess and develop new methodologies, as outlined here:

Two Contradictory Methods

Formal Analysis

There is nothing worse than being asked a question by an investor that you don’t know the answer to. So to reduce the failure of not attaining capital raising, the following three essential nonnegotiable phases to successful rainmaking may be considered:

Next, it is time to write the relevant documents. This may include a business plan (ensure that this meets the exchange listing requirements), a prospectus, and a strategy for the group. The latter document is different from the business plan as it contains specific tasks and goals for directors and key staff.

The Creative Approach

Some economists say that this method is not really in opposition to the more formal analytical method of analysis of your company. In fact, it is often the lack of creativity that leads companies into the financial abyss. The Rainmaker usually starts here, looking at how you conduct your business before assessing the more factual statistics. Indeed, everyone has those facts, but not all entrepreneurs have the ability to run a company and solve issues that could impede new paths of profitability with creative thinking.

Defining Creativity

This implies the ability of an entrepreneur to generate new ideas and approaches to company strategy and management. Stated from an economic perspective, this involves the ability to identify opportunities based on these new ideas and approaches and to turn them into economically viable products and services.

Environmental aspects that may influence creativity can be broken down into four factors, namely, economics, business, politics, and technology, including the availability of resources such as capital, people, expertise, skills, competition, Socio-economic conditions, and government and business regulations and guidelines.

It is interesting to note that even when creative flair is present, there is no guarantee that creativity will occur. So whichever method you deem perfect for you, the true entrepreneur leaves no stone unturned to turn vision into action. In combining the two methods, creativity becomes an analytical process whereby the current task is strategized to achieve a path to your desired financial outcome.

It must also be noted that many companies see a creative process solely as an expense.

Starter Questions

Before we delve into the necessary basics, I have a short list of questions that you should regard with brutal honesty. This chapter has asked whether your concept has what it takes to fly and succeed. Actually, the question should be whether you have the ability to steer the company to success. The following list requires a simple yes or no answer. If you get more no than yes answers, it’s time to look at some harsh realities. Maybe you don’t have what it takes to start and run your own business.

Every new entrepreneur should consider the following 10 questions:

Rainmaker Observation: The role of The Rainmaker is to help you make things happen, from structuring your business to being profitable to raising capital. There is a dire need worldwide for SMEs to succeed; thus, writing this book should make the process of achieving your financial goals easier, while assisting in employment creation.