101 Adsense Alternatives
Answer The Investor's Questions, Not Your Own
Reporter: So, Mr President, how come you broke your pre-election
promise to not raise taxes?
Vendors too often play that game. They have the lines they believe will impress the investor and they tailor the questions to exploit those pre-prepared answers.
Investors are smarter than that. In fact, they find it incredibly frustrating when you answer your own questions instead of the ones they'd like you to answer.
For example, many vendors explain how popular their main search term is. The popularity of the term measured by how often people search for it in Google is, of course, irrelevant. The buyer is more interested in how many unique visitors arrive at the site using that term and how well they convert. Talking about irrelevant factors screams that you are trying to distract the investor from the obvious lack of relevant signals.
With that in mind, here are some of the questions I see sellers answering ... followed by the real questions they should be addressing.
Bad Question To Answer: How easy it is to run this business? (Nobody believes you, they'll form their own opinion during due diligence)
Instead provide information on what human capital/ accumulated business knowledge and experience accompanies the sale. What form is it in? (management team / embedded in smart software / a pdf manual)
Bad Question To Answer: How all/most of your traffic is free traffic from Google (bad business model).
Instead, try these: How resilient is your business to changes in underlying conditions? How sustainable is the model? Is there any real IP underlying the business's core value? What are the key contracts and key relationships you have in place?
Show solidity behind the business plan and operation!
Bad Question To Answer: What a new owner can do with the business / how they can grow the business (this is mildly insulting. Investors can come up with their own ideas. What the investor could possibly do in future is not a selling point, it's demonstrating what you failed to do!)
The investor is more interested in:
Does the business offer something unique to the market?
Bad Question To Answer: The "potential" of the business (potential is what the investor is paying for but, contrary to what most vendors think, it's not the potential you suggest. It is only that potential the investor discovers for himself)
Concentrate on what you do have rather than on what you don't. Explain the business plan clearly in a way the investor can understand and appreciate. Give the clear impression that the business figures can stand up to careful scrutiny, that someone examining every single penny of revenue, tracing its source and examining its provenance and then taking a fine tooth comb to every penny of expenses and customer acquisition costs ... won't be disappointed.
Other questions the investor might have:
Location and Legal:
Can I run it in my country? Is it legal here?
Are there any restrictions with the earning programs that would prevent their
Is there any seller financing or loan note?
Is the seller willing to sign a non-compete?
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