|We've all seen the hype: "We'll put
your plan in front of thousands of investors!" "We'll write you an
award-winning online business plan!" "Only $3,000 for thousands of
investors to learn about your company!"|
I cringe every time I see one of these ads. Vultures are preying on
honest business people who want to fund their businesses. Here are
some ways to spot them:
1. "Only qualified investors see your business plan." Yeah, sure.
And who "qualifies" them? Have a friend try to sign up as an
investor (that part is usually free). How is she "qualified"? Is
there a background check? Does she submit a financial statement?
Odds are that she will be asked to do nothing more than sign a
statement that she has a certain net worth. That's no
"qualification" in my book. So who are these "investors"? Who
knows. One could be your strongest competitor.
2. "You approve anyone who sees your business plan." Okay. So what
are you going to do to qualify the potential investor? Are you
going to run a background check? ask for ID? ask for tax returns?
or just be so happy that anyone wants to see your business plan
that you jump on the idea? (That's how these scams get away with
charging thousands of dollars -- too many entrepreneurs are
desperate for funding.)
We have spent $113,317 testing and reviewing
different opportunities and money making strategies. Whether it's
stock market investing, real estate investing, internet marketing,
direct mail, MLM, or buying a franchise, we've been scammed,
cheated, and lied to! It took testing hundreds of opportunities to
find out what works and what doesn't. If you want to find out what
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3. "It's only $500 (or $300 or $100) to register." What does it
matter if it's free? If it is diverting your time and energy and
resources away from finding a viable investor, it's not worth
4. "Your idea is great, but we need to put it into our format. This
will only cost $800." Don't walk -- run from these guys.
5. "Your idea is so great that we want to invest $2,000 in it."
(That's after you spend $5,000 to put it into "their" system.) Do I
really need to comment on this?
6. "Talk with a satisfied customer, or 2 or 3." Here's this
entrepreneur who just got $2 million in funding, and he has nothing
better to do than sell the web scam to you? Trust me, entrepreneurs
who just get funded barely have time to eat, let alone talk.
7. "Look at all these written testimonials." This is harder to
disprove because the testimonials look so real -- even the
companies might be real. But unless the testimonials, and the
companies, can be verified independently, I wouldn't trust them.
And I'll lay odds that they cannot be verified independently.
There is one huge exception to this: ACE-Net
(http://activecapital.org). This is more properly the Access to
Capital Electronic Network run by venture capitalists,
institutional investors and individual accredited investors. It was
developed by the U.S. Small Business Administration's Office of
Advocacy to encourage the creation of a national marketplace for
investors to find and invest in equity offers by small
ACE-Net isn't for all companies. Those seeking under $1 million
will probably find the paperwork daunting. Those seeking over $5
million won't qualify. There are special qualifications, and of
course lots of forms to fill out -- but nothing like the forms
required for a formal initial public offering.
But for those who do qualify, it's an amazing tool in raising
financing. Spend some time with the website and the forms, and see
if your local SBA office can put you in touch with another company
that went through the process.
As with any investor tool, don't rely exclusively on ACE-Net. Use
it in conjunction with your personally developed targeted funding
search. This, combined with an exceptional business plan, doesn't
guarantee success but it places your company head and shoulders
above all the rest.
Since I review business
opportunities and internet gurus all day for a living, you can
guess I know which ones work and which ones don't. Click here to see how I