By George M. Dawson
Q. How do I attract investors to expand my classic car restoration business?
A. First, rule out large professional venture capital firms. Instead, look for "affinity" investors or angels.
Affinity investors already have a personal interest in classic cars. They understand and like your business. Affinity investors come from three sources: your customers or others like them, suppliers to your industry, or companies that sell noncompeting products to classic car owners.
Investors are successful businesspeople. Gear up a highly polished investment proposal. Get legal advice so you don't crash into state securities regulations.
Offer the realistic expectation of a decent return to your investors--somewhere between 20 and 30 percent annually, or its equivalent. Create special financial or personal benefits for investors. Your investors must believe they're part of a privileged club. Offer special rallies, discounts, services . . . you get the idea.
Pay 15 percent interest, and offer customer/investors a 10 percent discount on all parts and repairs. Offer to make a supplier/investor your sole source or to pay a price premium on all your purchases. You and a noncompeting restorer/investor can exchange mailing lists, cross-market or cross-promote.
Which of your customers have money? Locate other owners of classic cars through motor vehicle registrations and magazine subscriber lists. Inspect the Thomas Register of American Manufacturers (http://www.thomasregister.com) for new supplier contacts. Who are the importers and distributors in your industry? What other products do owners of classic cars buy?
Never ask an investor for money on the front end. Ask for advice instead. If the investor likes your plan, he or she will rally behind you. Always leave a meeting with a new name to contact for advice. Don't race to sign up just any investor. Make sure their financial goals and personalities mesh with yours.
George M. Dawson (firstname.lastname@example.org) is a small-business consultant and author of Borrowing to Build Your Business: Getting Your Banker to Say "Yes" (Dearborn, $16.95, 800-621-9621). E-mail him your financing questions at email@example.com
Phillip Cook, c/o Financial Network Investment Corp., (310) 325-9002, firstname.lastname@example.org
Fayerweather Consulting, (419) 897-0528