Finally!  Here’s the last installment of a three-part series on successful business buying. The previous two columns outlined risk reducing tactics to buy smart.  Entrepreneurs and their co-investors are best served when they know exactly what they are buying and preferably pay a below market purchase price to help cushion unexpected problems.

I know I have tried the patience of readers who want to know the fast route to a fast $100,000 angel investment to help buy a $750,000 wine and coffee retail business and commercial building.  So here’s my long awaited secret to funding success: Slow down!  Yes, slow down. 

There is a frustrating but ever present disconnect between ambitious entrepreneurs and potential angel investors.  Entrepreneurs by their very optimistic, nimble nature crave action.  Once they identify an opportunity they want to move quickly.  While this, often pushy, act-now attitude generally helps businesses seize market advantage, it doesn’t inspire speedy angel check writing.   

In contrast, “active angels” (angels that invest yearly in young companies) proceed with caution.  They like to get to know the entrepreneur, the business, the competition and how money will be spent.  They need to trust and genuinely like the entrepreneur before making funding commitments.  This takes time.

The more entrepreneurs press potential investors for a fast answer, the more likely they will get a fast reply.  The easy fast answer will be “No!”  Investors view “gun to the head” or “train is leaving the station” posturing as a negative managerial trait.  They prefer to back patient entrepreneurs who take the time to establish balanced working relationships with investors, customers, employees and vendors.

Entrepreneurs have to appreciate that profitable angel investing is no substitute for Vegas.  Don’t expect angels to just throw down their money without careful consideration.

Another factor that stalls or completely derails potential angel investments is over valued deal pricing.  If the valuation of the investment opportunity is “too rich” or “too inflated” the angel will quickly decline participation.  Business plan closed.  Most angels have other things to do with their time than haggle with “unrealistic” entrepreneurs.

Pricing investment opportunities is no different than selling a house or car; if you want it sold, you must price it to move.   It’s best to assume that sophisticated, active angel investors know the current market for their money.  And since they own the wallet, business buyers can save time by adjusting their expectations to potential investment partner needs.

With a productive mindset now in place, let’s target investors who are most likely to invest in a retail shop. Start by matching the business plan objectives to the angel’s “investment appetite.”  If for example, you are buying a retail shop as a model for potential franchising or multi-store roll out, then you should target deep pocket angels who think big.   

If your 5 year business plan is to remain a single store operation, then seek out current or recently retired executives in consumer-oriented retail companies as knowledgeable mentors and potential angel funding sources.   When real estate is involved, entrepreneurs can appeal to commercial real estate investors who may also be willing to invest in the base business or exchange equity for reduced rent.   Talk to local commercial real estate brokers and attorneys for referral ideas.  

There is no question that securing angel investors is a challenging endeavor.  But it can be done.  Entrepreneurs who succeed approach angels with respect, patience and deal proposals that generously compensate angels for their time, money and faith in your entrepreneurial dream.