Lorna Tilbian Columnist How to turn acorns into oak trees W ant to advise on building a business? Want to turn acorns into oak trees? Want to stack the odds in your favour? Take these seven guiding principles or pillars of wisdom and adhere to them with zeal. Back those who have done it before, who have built a business from scratch and who know the trials and the tribulations, the agony and the ecstasy. They know what the stock market expects of them the rules of engagement and have an existing fan base of investors who made good returns from them in the past and will back them again. Only invest in businesses you understand. If you dont understand a business, you wont be able to value it and, if you cant value it, you cant raise the funds to grow it. Price discovery is the key, and understanding the business model and how it generates cash unlocks it. Back businesses in growth areas with structural tailwinds to which investors will, in turn, be interested in allocating capital. Avoid talk of land grabs and TAMs (total addressable markets) at the expense of profits. With free money gone and higher interest rates here to stay, there is no point in backing a business based on future vision, global domination and other gobbledygook. Go for cash generation and the here and now. The chosen entrepreneurs must have real skin in the game; they must risk Profit with purpose has been at their own capital and not just play with the heart of every decent, other peoples money, otherwise Back businesses that obsessively focus long-lasting business built since on growing the top line and controlling known as opium. Ideally, they should time immemorial hold up to 20% of the equity, but no the costs to ensure a healthy bottom more, so they dont develop line and a sustainable dividend stream. imperialistic tendencies. The best investment is one that pays a Too much control is almost as bad as progressive dividend twice a year. not enough. They must be totally committed, not just involved. Dont over-concentrate on ESG (environmental, social and Think of bacon and eggs: the chicken is involved, but the pig is governance) and DEI (diversity, equity and inclusion) committed. Were after the pig. A sizeable shareholding does issues at the expense of the core. Profit with purpose has been not, of course, guarantee that things will never go wrong, as at the heart of every decent, long-lasting business built since invariably they do, but it ensures that the entrepreneur leaves time immemorial. no stone unturned in their quest to fix things. Look after your employees properly and they will look after your customers, which, in turn, will produce good returns for your shareholders. Back only those you know, like and trust. People buy people. Dont waste time pitching for new business from management  teams you dont know and where you have probably only been The further you go, the riskier it gets. People underestimate invited to make up the numbers and to give away your best cultural dierences and assume that if something works in the ideas and valuable time for nothing. Instead, rely on good old UK it will work in Europe and work in the US, where they business to win you good new business. Reputation is all. It is speak the same language. priceless. It cannot be bought; it must be earned the long way, Wrong. Conquer your own backyard first and then, only then, the hard way, by doing the right thing every time, all the time. look for opportunities further afield. No shortcuts. Meanwhile, be obsessive or be average. 39 Impact ISSUE 43 2023_pp38-39_Lorna_Tilbian.indd 39 18/09/2023 12:14