We are happy to reprint two articles in early February by two of the leaders in the worldwide BAM movement, Patrick Lai and Mats Tunehag. Mats Tunehag presented a landmark speech at the Christian Economic Forum in 2019. It is well worth the time to read. In the second week Patrick Lai reveals eight questions that every entrepreneur should be prepared for; also an excellent read. –Larry Sharp
by Patrick Lai
Lions and Martyrs are entering the colosseum to do battle. The Lions are investors, hungry to invest in solid BAM/B4T businesses. They hope to make money, as well as create new opportunities for the Good News among the least reached. The Martyrs are starting new businesses in spiritually, and some cases, economically difficult locations. The Martyrs are coming to lay it all on the line, praying not to be eaten alive. They are hoping to tame a Lion or three and bring each Lion, along with their expertise and their money, into their start-up business.
If you’re raising money for your company and you want to pitch potential investors and shareholders, it’s important to plan ahead for the questions savvy investors may ask.
Naturally, the Martyrs, and anyone who is seeking capital, can expect to be asked about your financial projections, timeline, the competition, your team, marketing strategy, risks, personal experiences, how much “skin” do you have in the business, and your exit strategy. Expect experienced investors to study your business plan with a fine brush and comb. Plus, investors will also grill you on your spiritual and personal life, to learn what you are made of.
I’ve experienced these same questions with my own start-ups. Nonetheless, it was the following 8 questions that I wasn’t expecting that kept me on my toes. And not surprising, it is the investors who asked these hard questions that were the most helpful, and often the ones that I ended up having the best relationships with.
As you start your business and seek capital, you may never be asked these questions, but you should be prepared and have your answers ready – just in case.
1. Why Are You Uniquely Able to Solve This Problem?
A start-up is an underfunded long-shot, hopefully designed to meet a need and solve a problem. Investors wish to know, what’s so special about you that you think you’re the right person to solve this problem? And why hasn’t anyone else tried to meet this need before? What do you know that others don’t?
2. How are you tracking the current trends in your market?
It’s important that you know your industry. Who do you talk to, what are you reading, where do you go to find data to stay on top of your industry’s trends? The world, including most lines of work are constantly changing. Be prepared to share how you find data about your customers and industry, and how you will apply those findings to your business.
3. When you are ready to scale your business, how much more money will you need?
The start-up phase usually lasts 6 months to 3 years. Intelligent investors will want to know how much money you need to scale your business beyond that. It’s actually a very good idea to have multiple budgets and financial forecasts in your back pocket, so that if asked, you can address different growth models for expanding your business.
4. What was your biggest failure and what did you learn from it?
Everyone fails at something. Entrepreneurs know that failure is actually an excellent teacher. Most of us learn more from our failures than our successes. Personally, a couple of times I’ve been pitched to by new workers who boasted that they’ve never failed. Clearly, they did not get a dime from me. I certainly didn’t want to invest my money in teaching them what they needed to learn through failure!
5. Who believes in you and how can I get in touch with them?
What the investor is checking for here is, who are your mentors, consultants, and coaches? Investors want to know who, and what kind of people are already invested in you, who believe in you, your ideas, your potential and abilities.
6. What entrepreneurs are your heroes and why?
We often become like our idols. You can tell a lot about a person by who they admire.
7. What if in a few years I no longer believe you’re the right person to continue running this business—how would you respond?
Particularly with startups, the founding CEO is often not the right person to scale or even run the day to day operations beyond the start-up phase of the business. Investors ask this to learn if you are a controller who is going to put him/herself before the best interests of the business and the ministry.
8. Have you ever been fired from a job? Tell me about it.
Potential investors ask this to observe how you will respond. They are seeking to learn more about past challenges you’ve experienced and how you communicate those challenges.
Let the games begin!
Patrick Lai first and foremost describes himself as a slave of Jesus Christ. During his thirty-two years in Asia, the Lord enabled his team to gather four groups of Muslim believers and start several small businesses. He authored Tentmaking: The Life and Work of Business as Missions, Business for Transformation as well as numerous articles on BAM. He founded the OPEN Network and Nexus B4T, a network of over 700 B4Ters, BAMers, and tentmakers. Currently Patrick and his wife, May, mentor and coach B4T workers in unreached areas and teach extensively around the world on this new paradigm for doing mission in a changing world.
***Material first published on Patrick Lai’s blog here. Reposted with kind permission.***
Larry Sharp, Director of Training, IBEC Ventures