1. Proven operational experience

Investors want evidence that you can handle the messy realities of running a business. This goes beyond having an MBA or consulting experience—they want to see that you've managed people, dealt with customer complaints, and handled daily operational crises.

Key experience investors value:

Direct people management and team leadership
P&L ownership and operational responsibility
Customer-facing roles and problem-solving
Experience in blue-collar or service environments
Structured operational roles (including military background)

We asked Stef Fisher-Sample from Pailor Capital, who has 18 years of operating experience, about what she needs to see in a prospective searcher. Her response is direct: "People that have never managed a single person in their life, [I can't consider] because small business... It’s one people management issue after another."

Sometimes, the right operating experience doesn’t necessarily have to come from the private sector. The unique challenges you’ll face running a blue-collar business can resemble the leadership experience you’d have from military service. Chris Hartman of 12 South Capital Partners says, "Maybe they're in the military—just something that tells me that they're not gonna be scared of working with a blue collar workforce because they've [already] done it and want to do it again."

2. Financial commitment and skin in the game

Beyond operational experience, investors typically want you to have a meaningful financial stake in the deal's success. This serves two purposes: aligning incentives and demonstrating confidence in your abilities.

While it’s not always practical to invest a meaningful portion of the total equity injected, there are different ways to show your financial commitment. Ultimately, investors want to see that you are going to stick it out when times get tough and have personally contributed as much as you reasonably can, just like they will. You can do this through:

Direct cash investment in the deal
Personal guarantees on SBA debt
Family and friends investing alongside you
Former colleagues or bosses writing checks
Forgoing salary or taking reduced compensation initially

Farag emphasizes: "As much as possible that the searcher can bring actual dollars to the table is critical... If not, then what you want to ask is, is their family investing money? Did their former bosses invest? These are all huge signals."

3. Self-awareness and realistic planning

The best searchers acknowledge that small businesses are unpredictable and present realistic scenarios rather than overly optimistic projections. They show they've thought through challenges and have plans to address them.

What this looks like:

Honest assessment of risks and potential downsides
Realistic financial projections with multiple scenarios
Clear articulation of what you don't know and how you'll learn it
Willingness to discuss trade-offs in your strategy
Evidence of learning from past mistakes or challenges

An overly naive call with an investor can appear as if you’re blind to the challenges ahead of you. We asked Niklas James, Founder and GP of Minds Capital: "I like them when they're more reflective as opposed to salesy in their presentation. I want them to be honest [about the risks] and have reflective thoughts on it as opposed to being pushy and salesy."

404

This page could not be found.