Featured in Alltop StartUpRoar

Saturday, July 2, 2011

You Have Just Been Told “The Baby Is UGLY”

Every entrepreneur spends extensive time and energy in developing the new company.  The emotions of attachment are rather strong and the entrepreneur has the unshakable belief that the business being created is excellent.  The NewCo is often like having a child that is created, nurtured, and raised.  Thus, many investors recognize the entrepreneur’s company is like the entrepreneur’s baby.

Spending time on the road to raise capital or develop partners takes energy.  A well prepared pitch has been created and will be delivered many times with many variations.  One of the end results of having spent all this energy and presenting the company extensively is that you sometimes become a stronger believer of your own pitch and could lose your ability to take critical comments and use them to improve.

In the movie the Wind and the Lion, Sean Connery provides a comment on criticism which is funny but has a bit of truth to it.  This is not an exact quote so but goes a bit like this:

If one man calls you an ass, you can laugh it off.
If two men call you an ass, you can just walk away.
If three men call you an ass, you may want to go out and buy a saddle!

In short, the feedback from those you present to has value and may have merit.  What you do with the information is even more important.  Keeping your critical side throughout the growth and development of the company allows for improvement.

So what do you do when your potential investors or partners offer the comment that sounds like your Baby is UGLY?  Just a few thoughts:

Ask for Clarification: You just got feedback that something is wrong with the business or model.  Perhaps you overlooked something in your analysis and creation of the business plan and pitch.  Asking what the features are that seem to not be enticing to the investor or partner is important to understanding why they think you have an ugly baby.  You can not address the issues or even determine if they are real if you do not learn what they are.

Understand:  This is a difficult part of the process.  As the creator, you will almost always want to reject anything said in a negative way about the business.  Your first thoughts are to be combative or defensive and try to teach why the person it wrong.  This may only make the situation worse.  It is ok to explain your side but with a goal to understand whether the negative opinion is well founded.

Analyze:  Has the negative opinion been provided by more than one person?  Hearing about an issue more than one time may be indicative of a broader problem.  You are likely to face this opinion in a larger population of the investors you will meet in the future.  Exploring a means to address the negative issues and strengthen the company should be your next steps.  This is one of your main goals from the start of the company, so use the negative feedback to alter and build.

Change:  It is easy to keep going with no changes, but this may produce a less than desired result.  Improving the pitch and business model to account for negative issues seen by others can be beneficial and help you capture more interest.  Try to be objective in the process.  You must feel confident that the changes are real and valuable to the business and to your investor base.  Change without value creation has no place in your business.

Get a New Baby:  Hate to say it, but sometimes you cannot make the baby pretty enough to get an investment. Doesn’t mean you do not love it, but it could mean the baby will not win any beauty pageants.  Picking a different business or approach may be the only answer.  Just do not be so locked to your ideas that you cannot abandon bad ones.

Taffy Williams is the author of:  Think Agile:  How Smart Entrepreneurs Adapt in Order to Succeed to via Amazon