Having a clear and organized plan for raising capital could be one of the most critical things you do for your business. While many of us can feel intimidated, it is by no means an impossible task. You just have to know what investors are looking for, and how to show this to them. Join Doug C. Brown and Devon Moody-Graham, Founder and CEO of CEO Mom Empire, as they do a deep dive into fundraising for entrepreneurs and discuss making businesses fundable, preparing for investment meetings, and much more.
Devon Moody-Graham, MBA is the Chief Solutions Officer of CEOMom Empire LLC and Lead Strategist in Business Development to several companies, non-profits, and universities. Devon has worked with over 500+ businesses and 15,000 youth and young adults in entrepreneurship and professional training over the last 12 years to bring awareness to the feasibility of wealth building. She has an end goal strategic approach to guiding clients and has a vast network of connections that takes both small business and corporate clients to the next levels of innovation and revenue generation.
Visit her website: www.CEOMomempire.com
Devon is giving away a free 1.5 Strategy Session for business owners who need to reevaluate revenue generation and capital needs. Contact Devon and her team here! www.CEOMomEmpire.com/contact
My guest is Devon Moody-Graham. She owns a company called the CEO Mom Empire. I brought her onto the call because she has some specialized skill sets. One of them is proposals. The other is raising capital, whether it be with investors or through banks. I know a lot of you have said, “I wish I could get funding for my company,” but you didn’t know how to do it. We break things down for you on the basic concepts of what investors and banks are looking for and how do you write a quality proposal.
Many people are putting proposals out there that aren’t quality and they’re not what’s in it for the actual reader. We discuss these things at length. She’s a super nice woman. She works a lot in the international community. She also works a lot with the minority communities and helps them as well. She’s a smart gal. You’ll like what we have here. Without further ado, let’s go and bring Devon to the call.
Let’s welcome Devon Moody-Graham. Welcome to the show.
I’m glad to be here.
There’s a lot of great things that you do. A couple of them that I like to cue in on is regarding proposals because a lot of people put proposals together that, quite frankly, are not that impactful. I would love to talk about that. One of the growth strategies in life and business is being able to keep cashflow coming in, sometimes cash infusion. How do we get prepared for that? I know you’re an expert in that and you’ve helped people raise millions of dollars.
Why don’t we start with, how do you get the capital first? How do you get prepared for bringing in the capital? There are different ways of doing it, through investors, private funding and all kinds of ways. Quite frankly, most people in business, whether they’re selling or whether they own the company, are confused about how to do this the right way. Would you tell everybody from your perspective, how do you get prepared for capital investment, whether it’s competitive or from an investor themselves?
The first thing that I tell people is that you have to tell the truth. Especially, a startup business, as a small business, it seems as if you have to create such a huge presence as far as what you’re going to do in the immediate future, especially when you’re looking at investors. Nowadays, we have so many investors who lost money because of false hope, fluff numbers that in this climate, as people are more realistic about business and innovation, it makes sense for you to start with the solution that you’ve created, that people actually like.
Look at how that’s impacting people and how you can put that on paper with as less fluff as possible and create this realistic goal that can ultimately be scaled. I literally tell people, “Let’s be honest. Cut to the fluff. Let’s get to what it is that you do that is a solution for other people. What is it that the banks are looking for? What is it that these investors are looking for as far as a goal? What makes sense? Let’s write to the authenticity of that solution.” That’s literally how I work with people.
It sounds like that’s a great philosophy for proposals as well. Cut the fluff, get right to the point and do the right thing when it comes down to it. If I’m somebody sitting here going, “What’s the truth?” What parameters of truth are we looking for? My proposed solution to my clientele, truthful numbers. When people ask about investors or investment, I’m like, “Do not embellish.”
They’re going to sniff this out. They’re going to find it. Whether they find it on the first call or by doing their due diligence or whatever it might be. I know everybody likes to say, “This is like a resume,” but it’s not when it comes down to it. What would be some of the parameters of truth that people who are going to invest in the company want to hear?
As basic as it sounds, people invest in people. When it boils down to, it’s like, “What experience caused you to create this solution which is now a business?” People understand if they have a business or some type of hobby or something that’s transactional if this is truly a business that’s going to serve people in the long run and be scalable, then what solution are you providing? Is it very broad? Is it very narrow? Also, marketing to that because when it comes down to sales and marketing, we’re all emotional people.
Some part of the emotion, whether it’s our fear, happiness, you have to look at that solution and say, “Can you market this to enough people in a way that is going to be profitable and make money? As far as investment, make them money as well?” That’s what you want to show your personality on calls and on paper. You want to say first, “Who is it that you’re providing a solution for?” You definitely want to understand your market very well. If it’s something that maybe you’ve only sold something regionally, but you know that there are other regions, states and countries that have the same need, then you can show that.
It’s important that you narrow down what it is that you have, even when it comes to something as simple as water. Everybody doesn’t buy the same water. I spend $4 on a bottle of water. In particular, in my taste, there are some people that are only willing to spend $1. Those are not in the market of water that costs $4. You need to make sure that you understand your market, understand your customer and make sure that this is something that they’re willing to spend their funds on, especially if it’s something that’s B2C.
I would say sell to their solution. What problem are they solving for people? Is it big enough to get you enough market share that makes sense for the investor? Also, if you’re going to a bank that makes sense and the bank is like, “This isn’t that risky. It has a large enough market share that I’m willing to lend you this money that you can have cashflow, so you can get the equipment or whatever, whether it’s product or service base.”
That brings up a good point. A private investor may look at this differently than a bank does. In a bank, I found to be far more conservative than some of the investors in the community. I’m a company. I need to raise $1 million. To an investor, how do they look at it differently than a bank?
To an investor, it depends on how aggressive they are. Some investors are willing to wait a little bit for their money. “I’m not looking for a 100X, maybe just 10X, depending on what this is.” Investors want to know, the same thing that you know your market, that it is feasible and reasonable for them to know that you can get enough of the market share with whatever their investment is.
If their investment is going to help you with marketing and spreading that product around the country on a tour if that marketing can help you to create get enough inventory, to put it out. A lot of times, it’s about the next best thing getting to people. A lot of times, people can create things that no one else sees. Your profit is so large that it can catapult you to getting into multiple markets. With social media and other forms of media that are not as expensive, it can get in front of more customers.
It boils down to how creative you can be with this investment that I’m giving you that will show me that I can get a return as fast as I want to get a return? That’s how investors are looking at it. They want to make sure that you know what to do with the dollars because you can give people money, but if they don’t have the correct strategy to use it, then it doesn’t make any difference.
Banks look at it as similar but different. They look at it almost in reverse at times. How does a banker look at it? A fast return is usually an investor’s dream and a multiple. They’re going to go out there, whether it’s an SBA loan or non-SBA or whatever it might be. For those of you who don’t know SBA, that’s Small Business Association. The reason I’m asking this, Devon is because many people that I’ve talked with they’re like, “I go to the bank and they turn me down.” They’re frustrated because they’re like, “I’m making $1.5 million, $2 million, $5 million, $10 million a year.”
I talked to one company they’re doing over $50 million a year, but they cannot get a credit line even though they’re profitable, which is a little crazy. It’s because of the way they structure their books and they deplete down as much as they can at the end of the year. The bank looks at it very differently. Can you speak to that? If you’re going to go for bank funding of bank financing, how do you want to structure your books?
As entrepreneurs, we tend to go, “Let’s reduce everything we can so we can pay the lowest amount of taxes. The bank usually looks at that and goes, ‘You’re a bad risk.’” What does the average person have to do in order to get bank funding? How far down do you deplete it? Do you want a certain percentage as profit? Banks look at it differently based on what you know.
Exactly what you said, as a small business owner, banks are looking ultimately at the income and adjusted gross income. What is your profit in this? You may have made over $50 million, but if you took your books down to show that you had $42 million in expenses, then they’re like, “That’s pretty risky.” Your revenue was $50 million but you had too many expenses.
We know as business owners, we take those expenses down much that we won’t have to pay taxes. In order to prepare to go to a bank, depending on how old the company is, they want at least 2 to 3 years of bank statements. They’re going to look at those last three years. Let’s say 2018, 2019 and 2020. If 2018 was less and then you grew in 2019 and 2020. That’s a trend that they want to see.
If you know that you’re going to be looking maybe in the upcoming year for bank funding, it’s a good idea to literally put some money aside, maybe even create some way that you can stash some cash for these taxes because you need to make sure that your revenue ultimately is higher in those last two years so much so that it looks as though the growth is more. I’m saying that to say, you need to count less expenses, at least on those last two years or if you can get less expenses on the previous year that helps.
They’re saying, “Not only is it growing. We can see what these projections will look like.” If they’re looking like this for the last three years, we can see what these projections are going to look like for the next three years. It makes you look less risky. In the grand scheme of things, let’s say in 2018 you made $20 million and then your expenses were $18 million. They’re like, “That’s a lot of expenses.”
By 2019, if you’re like, “We made $25 million, but our expenses were $10 million. The year prior, we made $40 million and our expenses were $20 million.” You’re showing $20 million, $15 million in revenue, and you had that $2 million because they know businesses are going to incur more expenses, especially on the frontend, depending on the equipment or whatever that those other fixed purchases are.
If you can show at least that prior year, but if two years can show that you had less expenses, you have more of a handle, it’s showing that you have more actual profit and not everything that you’re making, you’re paying out in expenses because that’s going to continue to look risky to them. That’s one thing to think about. You’re going to pay those taxes to look less risky and not only to the banks, but that also is going to look more attractive to the investors as well because you have these expenses, but you have more profit.
I found that investors are a little bit more flexible or tolerant of that because, let’s face it. Nobody wants to pay $500,000, $2 million taxes. The reality is when you’re working with banks, they look at risk tolerance. Their risk tolerance is much lower than an investor in most times. It’s going back to the presentation and proposal again on how you set this up. It’s important for banks to show that you are profitable as well as the investor. They want to see that too.
We’re speaking with Devon Moody-Graham of the CEO Mom Empire, LLC. She’s a specialist in a lot of things. One of them is capital raising and the other is proposals. I see many proposals that people put out for my clients. I’ll read the proposal and I’m like, “Where the heck did they learn how to write a proposal?” This is terrible. If you want proposals that profit, could you kind of give us a framework of, “This is what you should have.”
One of my go-tos now for several years has been looking at the Business Model Canvas. I would write like 40-page business plans for people. The worst is when people are only looking at the executive summary, look into your market analysis a little bit, and straight to the projections. You spend all this time putting this together and that’s what they’re looking at.
For those who are not familiar with the Business Model Canvas in The Lean Startup, I recommend that book because it takes the complexity out of what it is you need to know in order to help your business to properly function internally and to make it grow. I literally make sure that in any proposal, they need to understand their value proposition. That’s important.
Many times, people, they create this out, I want a business or I have this business and people can make a lot of money being transactional. They have this widget and people are buying it, but they never had a plan on, “They have purchased all these widgets but did I use the best products to create it? Is it the highest profit that I can have? Am I using the right suppliers?”
Making sure that you can truly understand the value that you’re bringing to your customer is super important. I’m always talking solution-based. Everything I do has to be solution-based because as a business owner, a mom and being in life, I need solutions to problems. If you can be a solution for someone, whether it’s B2B or B2C, make sure that you are clear on what it is that you’re bringing to people and how you’re helping them in some way. Make sure that’s clear.
What can I do for you? That’s the first thing and then you’re looking at, how can I do this for you? When you’re looking at how you’re looking at, who are your partners? That’s how you’re looking at your key partners and your resources. Are you connected enough to make this work for that person, especially when it comes to huge proposals?
I was in commercial development, when you’re looking at funds that are state and federal funds, they want to know how can you help the community? How can you create jobs? How can you add to whatever’s missing in the community that you’re building in? You’re going to the municipality asking for tax abatement. They said, “We give you tax abatement, then you need to create jobs. You need to create something. It has to be mutually beneficial.” They know that you want money because you’re proposing for money, but you have to make sure it is of value and you need to charge your work. Your ask needs to come off strong, not in fluff, but in value. It needs to show the value that you offer.
The value is what’s in it for them. That’s how they’re looking at it. This is what I see many times in proposals and a lot that I review are more sales-oriented. They’re trying to be the consultant or expense management, reduction or they’re a vendor trying to sell their products, whether it be a $10 million machinery or whatever it might be. When I read it, it’s all about, “Me. We can do this. This is us. This is that.” I see them missing this exact component that you said. What is the value? What does the value mean to the end person who’s going to be making that buying decision?
When we’re writing a proposal, we’re creating a sales offer. What I found is we have to understand that person, the people they work with, what they want for professional return on investment as well as personal return on investment and the organization as a whole that’s being pitched. If we hit those points that are important to them, it is mutually beneficial. What ends up happening is it’s no longer necessarily a proposal because it’s going to resonate with these people on the other end especially compared to the majority of the proposals that are coming in.
You hit a good point, which is the length of the proposal is reflective of what that value is. Most of my proposals when I’m going after accounts that are six-figure plus on my side, most of my proposals are 2 pages or 3 pages. That’s it. I learned the hard way. As you said, you put a 40-page proposal and I used to do the same thing. What I realized is a lot of the decision-makers, all they’ll do is they’ll pull through and they’ll look at the summary page at the end anyways.
They’ll take the 39 pages, set them on the desk and read the summary page. For anybody who’s writing proposals, Devon’s advice is spot on. You want to create value throughout what is in it for them. That is the key. Devon, if somebody wants to get ahold of you, learn more about you and your company, how do they do so?
I’m on LinkedIn at Devon Moody-Graham. I am on Instagram and Facebook as well. I’m on Twitter @DevonMoodyGrahm because my name was too long. I am very easy to reach. People can go to the website either DevonMoodyGraham.com or CEOMomEmpire.com. They can reach me and schedule a time to talk because I’m huge on three things we’re working with any client on any level. I call them the three Rs. I’m huge on relationships, revenue, and resources because if you don’t have those three, you don’t have a business that’s being profitable.
If people are sitting there and go, “I might be too small or too large,” what would be the ideal candidate or client for you, whether they want to fund or whether they want to get their proposals in order or marketing in order or whatever it might be?
If you are a pre-revenue, you can still contact me because even though I don’t personally work with companies that are pre-revenue, I do have access to resources. I can send you resources. That’s a part of my network. I can send that if you are pre-revenue. If you are a smaller business that’s starting under $100,000, $250,000, you can still reach out. I have a team that works with both those companies.
If you are $1 million-plus or $2 million-plus, I work with you as well for growth scale opportunities. The newest pivot in my business is international business. I’m excited about that because there are a lot of people who need an honest person to help them understand what it means to go into another country to do business because it’s more than selling items there. There are cultural things you have to think about depending on how much you want to grow. I have those and because of the relationships that I have and resources, any level can contact. I am working with companies that are in revenue but I definitely have resources for other companies.
You also specialize in minority type revenue growth as well, right?
It’s near and dear to me because I am a product of entrepreneurs. Understanding that they have not always had the right information. I made it my business when I became a consultant to seek out resources so that I could share information that people could get ready for those opportunities to grow and scale. That is very much a part of what I do.
I will second and champion what you said about going into the international market. I’m married to a Polish woman. Anytime I’m over in Europe, it’s a different market. Not radically different, but it’s different. The cultural values are slightly different. We have to know this, otherwise, we get ourselves in trouble, especially as Americans because we think everybody is like us.
I’m headed to Europe and family and downtime are very important in Europe. Those are big on core values. You have to know that you won’t be making those deals sitting in the office. We’ll probably be sitting outside of the cafe or walking or in a three-hour dinner. That’s where the real business is taking place because it’s off time or downtime. Nobody’s in the office at 8:00 PM. For me, that’s not normal.
It’s very different than the USA. In Poland, they’re very keen on, “Does your website look like a European website or does your website look like an American website?” People will actually make judgment calls on purchases based on that. In that country, what I recognized is a lot of them strive for perfection. Where in other countries, they don’t so much.
In England, there’s a certain way of talking to someone. In Africa, you have a certain set of ways of going. In Asia, you definitely have a different value system in some capacity. All people want the same things, but if you’re going international, I agree with you. You better know the market, people, the customs and the things you cannot get away within the international market.
Devon, this has been a great time together. I appreciate you coming on here. If you’re looking to raise capital, grow your company, get better proposals, certainly reach out to Devon. We’ll go from there.
Thank you for having me.
You are so welcome.
She brought a lot of good stuff to the game. When you’re raising capital, you’ve got to be aware like you are in any sales scenario. Who’s your target buyer? If you’re selling to a private investor, for example, what do they value? What are they looking for? What is the ROI professionally and personally that they’re looking for from you? It’s so important. Like it is in sales, if we’re going to talk the language, we got to be able to know what they value in that particular language.
I found it interesting and very informative. Whether it’s a private investor or a VC, they’re going to be slightly different in the value and the things that they’re looking for most of the time. Some of them are going to be similar, but when you’re dealing with a bank or you’re dealing with some type of private lending institution like a credit union, they’re going to be far more concerned with risk than an investor is going to be. That doesn’t mean the investor won’t be, but by the nature of the business.
When you’re dealing with banks, you want to be far more conservative. Investors like to have their numbers, not so embellished upon that they’re unrealistic, but they like to see more of like, “We want to grow fast strategy.” With banks, that’ll scare them off many times. You want to be very conservative. They’d rather see a small or incremental growth in the business over many years versus “We went from here and we grew by 60% this year, then we grew by 10%, then we grew by 50%.” An investor will look at that differently than a bank. A bank might even look at that as risk. I’ve had them do it to me.
On proposals, great information. Again, what’s in it for the end-user? Don’t make your proposal long and arduous to get through because, quite frankly, most of the stuff that people put in proposals aren’t even relevant to the desires of the end-buyer. If you like what she had to say, check her out and what she does. Give her a call. If you’re looking for help on your business as well, I’m here reach out to me @DougBrown123 on my LinkedIn or Doug Brown at the CEO Sales Strategies Podcast or Doug@BusinessSuccessFactors.com.
If you liked this, please go up and give it a great five-start review. If you liked the content and you want to learn something different or more on a specific subject, please reach out to me at Doug@BusinessSuccessFactors.com and let me know. To your success, go out and sell something and have a great day.