At least two to three times a week I hear from an entrepreneur seeking money to start or grow their business. Usually they need the money yesterday.  Sometimes the request comes from people I know, but, more often than not, I've never heard of the person or they've found me through six degrees of separation on Linked In.  Believe me, cold calling people who know nothing about you or your business is not an effective strategy for raising money.  How to search for money will be the subject of my next post, but today I want to focus on whether you're even ready for investor money.

The notion that you may not be ready for money may catch some of you by surprise. "Ready? Heck, if I don't get money soon, I'll have to find a job." Or, "Ready? I've got my 50-page business plan that took me six months to write; that must be worth something."  The fact is that neither of these scenarios proves that you're ready to seek investor capital.  Here is a little quiz  to check your readiness.  If you can answer yes strongly and confidently to every one of these questions, then you may be ready for the hunt.  Be honest and let me know how you do. 

1. Can you tell a compelling story about the feasibility of your business in under two minutes that would intrigue an investor to want to learn more?
2. Do you know how much money you need to achieve each milestone you've identified in the life of your business?
3. Have you built a bottom up sales forecast that is justified by actual customer data you've collected in the field?
4. Do you and your team have your own money in the game? (sweat equity doesn't count)
5. What is your exit or harvest strategy and do you have evidence that your assumptions are valid? (investors need a way out)
6. Have you answered thoroughly all the questions that are normally answered in a business plan?
7. Have you had conversations with (or networked, to use an overused term) at least 10 investor types in the past 12 months when you were not seeking money?
8. Are you willing to give up a big chunk of ownership in your business to insure its future?

If you aren't ready to look for money, you'll be wasting your time and everyone else's.  You need to put yourself in the best position to be successful in your search.