Andrew Hawkins

Do Business Angels provide a genuine opportunity or are they the latest scam?

Small business owners seeking additional funding are having a very hard time in 2010 with the established VC firms only interested in £5m plus deals and most banks having effectively shut the doors on new lending.

Business angels can be a useful source of early stage funding or at a time of significant expansion and while individuals may only invest quite small amounts they will often group together in a syndicate to provide larger sums.

There are advantages to using business angels as they:

• expect to lose a proportion of their investments – indicating they are prepared to take risks

• often conduct only cursory research – preferring to rely on their well honed business instincts

• usually only require relatively few meetings – rather than the ten or more most VC firms seem to need so they are a useful resource well worth cultivating.

However, like all successful sectors the scammers are moving in and small business owners can be particularly vulnerable if they are having difficulties raising funds and like most scams success relies on getting a small sum from a large number of victims.

So if you have any doubts about offers of introductions to investors – especially online for a fee of, say, £99 – take care as it may not be all it appears.

Legitimate business angels and the organisations that represent them are best contacted via a reputable intermediary that will be able to guide you towards those most likely to be sympathetic to your aims.

Don’t get caught up in a scam – raising funds is difficult enough already!

If you’ve had a bad experience dealing with potential investors, let us know – we’d love to hear from you.

An American consultancy did a study to discover whether the money its clients invested in executive coaching was getting a good return. It was not a large study, involving only 100 executives mostly from US Fortune 1000 companies. The results showed that companies that provided coaching to their executives realized improvements in productivity, quality, organizational strength, customer service, and shareholder value.

Unfortunately that survey shows only the best of the best. It doesn’t show that for many business owners hiring a coach can be a hazardous business.

Coaches seem to be everywhere these days, offering to coach us in every area of life and business. Some ‘life’ coaches remind me of that great line in Crocodile Dundee that goes something like “haven’t you got any mates?”

A business coach is often seen as someone who replaces the traditional consultant but while some of these have a great track record, many have absolutely no experience of business at all and are simply following a formula that a much cleverer person, who probably sold them a franchise, has devised.

Business coaching works best when the coaches are people of significant business experience who understand the workings of business at the highest levels. The need to influence and lead is important. The need for a robust business model is crucial. There is no mystery to how a successful business works but there are mysteries woven around why some people find it hard to do.

The best solution to increasing profitability must lie in the ability of the consultant or coach to ensure the business is functioning at optimum levels while at the same time ensuring that the business owner or CEO has the right skills to do the job. It is possible to have a good business with a poor leader but almost impossible for a good leader to get good results without having the right framework for making profit.

If you want someone to prove how business works best, choose a consultant with experience and a good track record. If you want someone to be your friend and ask how you feel about making money …… ask Crocodile Dundee.