photo credit: JUCCCE

When we purchased Rockford Ball Bearing Corporation out of bankruptcy in 2006, the venture capital market was flush with cash. This spring we sought an additional round of funding for our expansion. Venture Capital is never easy to find, but especially during these difficult economic times it is getting harder. New strategies need to be implemented to find capital.

There are several ways to prepare for VC interviews for funding. Three steps should be implemented out of the gate. These are verifiable and true options:

First, explore your accounting records, tighten up the ship. Cut as many overhead items that are reasonable without gutting your research and development budget.

Next talk with your employees, make sure that their advice is being heard by management. VC firms will start by talking with your employees at all levels. They will rely more on this feedback than your managers may be.

Last, review your business plans, take an objective look. See it through your worst critic’s eyes. What would they change?

The founder of our company Joseph Malik sold Malik Bearing Company to The Harvey Family in 1975. Malik Bearing was renamed Rockford Ball Bearing in 1982 when The Harvey Family had to reorganize the company during the protracted recession of the 1980’s. The due diligence was dinner and a hand shake. Today’s VC firms spend much more investigative time talking with suppliers and customers, reading industry reports and analyzing your firm against industry benchmarks.

The ball bearing industry is a tough business, as tough as the balls we mill. The margins are tight. Venture Capitalists seek the highest and best return for their investment dollars, and it matters not which industry they deploy their currency into. Leverage is a friend to returns of rising businesses but the enemy of gamblers who treat a manufacturing company as a casino. The Harvey Family over leveraged Malik Bearing Company and had to lower debts to get back on a positive stable business path again.

The Venture Capitalists knew this history and we worked hard to offer a better road forward for our business, they agreed and funded us $42 million for our expansion plans.

Michael Malik has run Rockford Ball Bearing Corporation since 2004, he has a MBA from Harvard University and has been a venture capitalist and business development executive in numerous industries.