It’s something that I get asked all the time as an entrepreneur. What do I look for in a potential investment? How does a successful entrepreneur approach an investment differently – what separates the decisions of people like Richard Branson or Elon Musk from those of mere mortals?
Well, I am still mortal – I’ve made plenty of mistakes over the years to prove it – but I guess I do have my own tried and test way of looking at a new opportunity. So, here’s a quick insight into the mind of an entrepreneur.
Follow your passion
The first question I ask myself about any new venture is simply ‘does this excite me?’ I suppose that over the years you develop the courage to follow your instincts, and mine have been pretty good in this respect. That initial reaction – my response to the question of whether I am actually looking forward to getting my teeth into a particular project – is fundamentally important to me. If I can’t bring my passion and enthusiasm to the table, then I can’t expect the rest of my team to do so either.
Of course so many of my business ventures also begin on a personal level. It might come from a pre-arranged meeting, or it might be a chance encounter – either way, for me it all starts with a human connection. I put a lot of store in this approach – I trust my instincts about people enough to know when to go with it and to listen to their story. There might not be a business opportunity in every social interaction I have, but it has proven to be a highly successful approach for me over the years. The bonus is that you end up working with people you believe in, who you like, and who you want to see succeed. That’s a pretty sound basis to work on.
Make a connection
I also look for synergies – those connections that can be made between my existing interests and any potential new ventures. How can what the new company offers improve my existing businesses? What skills and expertise do they have that will fill a hole in my current portfolio? And of course, most importantly, what kind of team do they have in place? How can working together make us stronger – and how will it help us to come up with new and unique ways to achieve our ultimate aims?
Money, money, money
Clearly revenue potential is a fundamentally important aspect of deciding whether to invest – if there are no sustainable revenue streams in the new business, it’s certainly hard to see any value in investing. So, of course I take a good look at the books. However I also talk to people right across the business – it’s my way of finding out just how sustainable their business model is – has the work that their management team put in gone beyond simply window dressing to catch the eye of potential investors? Are they in a market that is actually on the up, and are they well-placed to take advantage? Do they have an existing team that is strong, talented and capable enough, and are their revenue streams looking healthy for the long term? These kinds of questions aren’t the be all and end all – but they come close.
So, hopefully this has given you an insight into how I approach potential new business opportunities. For me, much of it comes down to personal chemistry, and finding projects I feel passionately about – but it’s also crucial to make sure that you put in the hard work to make sure that the business you’re looking at is fit for the future.