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FINANCING COMPANIES & POKER
When players are happy / secure / confident:
· Everyone is having fun, so a lot of people want to play. · The pots are big. · Some players win big. · Some players lose big. · Still everyone’s happy and playing.
When players are unhappy / sad / insecure / unconfident:
· Only a few people are having fun and few are playing. · The pots are small. · Some players win but not much. · Everybody loses. · No one wants to play.
Win, from the Angelo Saxon. winnan to strive, labor, fight, endure
Profit from the Latin,
proficere, meaning to advance.
“The positive gain from an investment
or business operation after subtracting for all expenses. opposite of loss.”
Profit Margin - Earnings expressed as a percentage of Revenue, ie the percentage of sales the company has left over as profit after paying all expenses
Earn from the Old English, earnian meaning to gain, to labor for.
Earnings - Total income minus total expenses; synonymous with profit.
A Winner doesn’t play every hand Know when to fold
Money-people do the evaluation of your company first. Only then do they determine a value for your company and if they want to get involved.
The top criteria for a good evaluation are not what you think.
1. IP (Intellectual Property) position – Issued patents, licensed technology, secret know how. Getting a patent on your new invention may not be the best strategy. With a patent comes disclosure. Then everyone can do a work around. 2. Management - experienced and able to fill the required job positions. Can they get the product to market? 3. Market Size – Will there be a sufficient ROI to bother 4. Some Funding – Friends and family to show the founders have some skin in the game 5. The Actual Idea – Good ideas are a dime a dozen
Money-peoples Company value:
· Their ability to pick start-ups and developmental companies that have a good chance of making it. A good chance is better than 1 in 10. · Their ability to attract investors to grow a sufficient fund that the Money-people can do over ten deals. · The ability to handle multiple deals. · The realization that nine out of the ten deals will lose money. · That one that pays off, pays-off big.
They want to make money for themselves and their investors. You and your company are only a vehicle to that end. Remember that. It will help you not get so emotional when you talk to a money people.
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These items are important too.
Gross Revenue - "Raw" sales income; the amount customers actually pay the company when they make their purchases.
Sales Revenue - Income from sales of goods and services, minus the cost associated with things like returned or undeliverable merchandise. Also called "Sales", "Net Sales", "Net Revenue", and just plain "Revenue".
Income Statement - Financial document showing a company's income and expenses over a given period (like one fiscal year). Also known as the Earnings Statement or Statement of Operations. The "bottom line" of the income statement is the company's earnings for the period.
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