The next question that you want to ask is, “Have you ever done it before?”
Here is a small secret: 95% of all businesses go bankrupt in the first three years. That is pretty much standard worldwide. One of the things that should clue you in on this is if they come to you and say, “I have this great idea…”
“I have a million-dollar idea.” Million-dollar ideas you can get for a dime a dozen. Think about that for a while and it will put you in a trance.
The idea is not important. The implementation of it is everything. The discipline to carry it off is everything.
You want to know if they have done it before.
How many people on the management team they have put together have the experience of building a successful business and exiting, or paying back their shareholders in the way that they have described?
If they come to you and say, “We have five people on the management team and three of them have taken companies public and the other two have sold companies in trade sales,” has your interest improved?
If they can’t even get one person with experience to join in their management team, does that tell you something about the true value of their idea?
I don’t know whether a business is going to be successful. The only thing I want to know is how many truly successful people are leaving their day jobs to be a part of it. If truly successful people are going into it full-time, they are the ones who will make it successful.
I want to know if you have people like that on your management team. Are there people with a track record of giving investors back their money?
I have only one thing that I am truly proud of in business: No one has ever invested in a company that I managed without becoming a millionaire. That is a fact.
Anybody who gave me a dollar of capital has become a millionaire. I have never accepted just one dollar, because it is meaningless. The first people that invested with me invested $56,000. Every one of them became a millionaire.
You want people with a track record of doing that, of giving you back your money.
In the next article we’ll discuss the next question you should ask – What are you going to use the money for?
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