“I need $1,500,000 to open a new distribution center in North Carolina. It’s a home run idea, but how much equity will I have to give up to raise that much?” Johnny (not his real name) and I have been good friends for seven years. We see each other socially several times a year, and once every 5 or 6 months we sit down to a serious conversation about his growing and vibrant medical supply business. “If I ever sell this business, I want you to handle it,约翰尼总是对我说, but at the age of 43 and appearing to love every minute of every day, I don’t expect Johnny to be selling anytime soon.
然而, Johnny is now facing a strategic decision that will dramatically affect the future value of his company. Several of his supplier relationships have encouraged him to establish a presence in the Carolinas. To do that, Johnny will need to establish a sales and distribution center there.
约翰尼知道如何做重大决定. He’s done his homework to project revenue from the new territory, 雇佣销售人员的成本, and the working capital required to stock the distribution center. He has even done a net present value analysis to justify the risk-adjusted return on the required $1.500万年 investment (an approach to making financial decisions I unfortunately don’t see many small business owners doing).
Johnny is set to go as soon as he has the $1.500万年, and he is ready to sell equity in his company to raise it. 然而, Johnny does not know how much equity he needs to give up in exchange for that $1.500万年. Being the analytic guy he is, he’s done his homework to understand pre-money, post-money valuations. But Johnny has lost sight of the fundamental question an investor will ask, “If I give you this money, what kind of ROI can you get me and when do I get the money back?”
This question forces an owner trying to raise capital to focus on how the capital will be used and how that use will generate a financial return. I told Johnny to set aside worry about valuation of his business, and instead focus on three questions: what the requested capital will be used for, how that use will transform the business, 以及投资者的“退出计划”. 问题就在这里, too many business owners just assume that investment money comes in and stays parked in the business until the majority owner decides to sell the company. This is essentially saying to the minority investor, you’ll get your money back when I decide to give it back. To be fair, that works with some investors, the rare uber-patient investor. But most investors want to know, going in, what the getting out 计划 could be. 我称之为“如果这样，那又怎样?? 计划.”
I suggested to Johnny he turn his analytic brain toward developing a 计划 to show an investor how they could get their money out within three to four years of the investment. “如果是这样，那又怎样。?” discipline will increase his chance of getting the money, 并确保, 等他拿到钱, he’ll be in strategic sync with his investor.
JIM CUMBEE is President of 田纳西河谷集团, Inc. a retainer-based business brokerage and transition mediation firm in Franklin, TN. Cumbee is an attorney and has an MBA from Harvard Business School. He has a wide range of corporate 和企业家ial experiences that make him one of the most sought-after business transition advisors in the state of Tennessee.