I am in the process of trying
to raise money for the web site, a substantial amount. This got me to thinking
about past efforts to raise money.
When you talk to a company they
have a committee – I call them that even though there may only be 2 or 3 of
them – and the dreaded accountant
usually heads this. Accountants have a way of prefacing their remarks with an
Hmmm. Like:
“Hmmm, instead of us lending
you money you should probably pay us to take this on” - followed by a grin. I
smile back politely.
“Hmmm, your bottom line is
non-existent.” That’s because we have not started trading yet.
“Hmmm, why don’t you come back
when you’ve made a success of your business?” I won’t need your money once I
have made a pile of my own!
We published a health magazine
for 18 years; still do although now it’s online only. One year our accountant
suggested that to increase sales we should “Put a picture of Labrador dogs on
the cover. Everyone loves dogs.” Hmmm, was he serious? Yep, he was grinning, like a great white!
As a race I expect that
accountants are very nice people; well educated, serious and well intentioned.
But when it comes to deciding whether or not a business is any good I doubt
they would know that even if it jumped up and bit them on the nose! They know
about accounts; profit and loss; balance sheets and so forth but that is not what defines a business. A business is
about an idea, a concept that you wish to construct into a business. An
accountant might be able to tell you about pricing and question your
expectation, but not much else.
A couple of years ago we had a
meeting with a team of large and well-established investors, about our project.
We received a call a few days later and were asked to go to London and meet
with a very successful entrepreneur - one of their own people, he stressed - who
had looked at our web site (NOT mybestfive.com) and had advice that would help
us a great deal.
At the meeting we were told
that our site was rubbish even though we got 20,000 page views a day. The
reason being that we did not monetize all the options and links. We explained
that the site was not there to sell products but to provide information. If it
doesn’t make money with every option, he said, then it’s rubbish. He was not an
accountant, just part of ‘The Team’.
I read in the paper today that
3i is likely to make significant job losses due to shareholder battles. I
believe they have lots of accountants. I also read that one of the Dragon’s Den
tribe had said to a potential client “I would rather stick pins in my eyes”
than back an invention the client was exhibiting. The invention is now sold in
16 countries and they have done a deal with Marks & Spencer to expand the
range. The Dragon is very successful; not sure if he is an accountant.
Placing money in start-up
companies should be done by entrepreneurs or by people who are willing to risk
a sum of money, not to make a few percentage points profit gain but to make
huge profits. Massive profits. If you want to make a few percentage points
there are safe ways to do this. Start-ups may not be one of them. A few will do
well but most will probably fail.
If you want to make a lot of
money, bet on people. People with ideas, people you think you can trust and
have great expectations and seem to know what they are doing. Be willing to
take a loss if it goes wrong but hope to treble your investment if it wins.
Hmmm, I don’t think accountants
work that way.
