How SMART Money to Accelerate Your Business?

You struggle to find funding because you focus too much on getting the money under specific terms and not paying enough attention to who is providing the funds. As not all banks are providing the same offer, you could resort to investors’ money as it is the best way to improve your probability to success.

If you have started a business or find yourself stuck in any of the business stages, here is an alarming statistic for you: up to 85% of businesses fail because they run out of cash. Hence, if you want to be part of the 15% that succeeds, you will need to see yourself on how to be smart about how you handle money. That means money cannot solely be generated from organic profit and you have to raise money from “smart money investors”.


Allen was a smart professional architect who worked for his boss for several years. Client would compliment him for being good at what he was doing. One day, an opportunity came and he decided to take the project for himself. He thought he could execute a better job than his boss and thus, he became his own boss. His journey as an entrepreneur was great for all the money he has made and freedom that he ever wished for.


After a year of learning, he needed to hire people for some of his work, so that he could have time to meet new clients and record expenses to track the profit of each project. He would draw money from the business whenever he needed to, and in result, his company’s bank account sometimes would either have too much money or lack of funds. The accountant he hired had trouble recording his personal money and business funds. To make things worse, Allen was unable to provide an answer for all the ambiguous transactions during the income tax department’s visit. As an impact from that, a penalty equivalent to the cost of a sedan car that he could have bought for his family was imposed onto him.

SMART Investor

What exactly is ‘smart money’ to you? It would mean other people’s money (OPM); but a better way to emphasise it, is that money is not lazy. Investors would hate the fact if their money just remains there with nothing being done and results in low returns. OPM generally means money not belonging to you, it could be from the bank, investors or any other people – but smart money tends to be more specific. 

In the venture capital world, smart money is an investment term that includes the money that people invest in a business, plus the time, advice and know-how which they put into the company. It is called ‘smart’ because the business receives not only the investors’ funds, but also their wisdom.

By understanding smart money deep enough, you would be able to attract them easily, because you are at the opposite side of the equation.

S = Spot
In the venture capital terminology, when just money is invested without the investors putting in any of their know-how or time, it is called ‘dumb money’. In the betting world, smart money refers to gamblers who know what they are doing and manage to earn a living on their bets. Investors usually identify the trend from others.

M = Market
Smart money is invested by those with a fuller understanding of the market or with information that a regular investor cannot access. As such, smart money is considered to have a much better chance of success when the trading patterns of institutional investors diverge from retail investors.

A = Advice
Smart money investors bring cash to the deal after obtaining advice from experts. But they bring much more than just money to your business. Smart money investors also bring knowledge and relationships that can accelerate the growth of your business and give you a competitive advantage. They are familiar with your customer’s wants and needs, potential sales objections, and market potential. They have a good sense of the best potential channel partners, industry analysts, and probably have insights affecting customer demand that you do not have.

R = Risk
Prior to investment, smart investors would want some reasonable control over their money that exposes them to risks. Most common methods include due diligence study, annual review report, and the appointment of fund managers.

T = Timeline
Return of smart money is expected, maybe within two to seven years, depending on the terms agreed and needs of the business. In the world of capitalism, the funds of smart investors are anytime more abundant than any businesses that need it. Smart money is categorised according to the timeline of each batch that are matured and need to return as a capital gain to the investor.

How important is your business so that you could match the right investor or bank? It does not matter if you are desperate to raise money, or have no interest in taking other people’s money in the near future, it is always a good practice to have a SMART approach towards money. That is how money should appear in a successful business. 

Now, determine how the SMART investor matches their SMART investee accordingly:

S = Scalability  
Investors invest in a business that could scale from one location to a multiple market segment, with bilities for regional expansion being much preferred. A scalable business is more attractive than profitable business, because the chances of bringing value is much higher than others.

M = Mission
It is very important for you to have a purpose and meaning in the business. A mission-driven business is important not just to keep you motivated, but it will attract investors to join your cause as well.

A = Attainable
Your projection and business goals must be achievable and make sense to bankers and investors. Asking for too much money or too little is not what they are concerned about. They frequently make business judgements, for instance “can you make it with my money?” – they simply want you to succeed.

R = Relevance
Is your pitch of funding related to what you do? The scope of where you use the money must be related to your area of business as well. Your bookkeeper must be able to distinguish your personal money and money that is used for business. This will make it a lot easier when it comes to auditing and future funding.

T = Time bound
When requesting for money, banks will show you a schedule of repayment. If you’re dealing with smart money, investors will want you to state the date for their money returns with gains. Raising money is easy, but the toughest part is being uncertain of when. When you are in need of money, you have to start planning and sourcing at least three months for the most suitable bank; and as for investors, you need at least six months.

Overall, yes, your business is in a SMART condition, but you still struggle to find an investor. You could go to the extent of hiring the smartest consultant to design your business plan and equity offer, and yet the investors do not have a liking or interest towards you – you will still not get funded anyway. After paying heavy tax penalties, Allen had learnt things the hard way, he decided to hire a CFO to plan his money to rebuild his business . He then started a new company with two smart investors, which was more like a partnership than angel investors as Allen gave away a small portion of his equity in exchange of capital and also valuable expertise to expand his business.  

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