Your business plan is your calling card. So what are investors looking for in a business plan?
- Credibility. Extensive due diligence.
- Competition. Know your competitors strengths and weaknesses
- A well thought out plan. Does it make sense?
- Realistic not optimistic. Don’t make it pie in the sky
- Anticipate questions, objections and do your best to have the answers in your plan.
But here’s what I rarely see in a business that might wow your investors:
- A quarterly implementation plan for the first eighteen months
- A realistic WOTS analysis. What’s going on in the market? What are the opportunities, weaknesses, strengths and threats to the industry? What’s going on globally? How is technology going to affect the future? What are the futurists saying, have you consulted with them? What about government statistics, world economic outlook, like the US Industrial outlook , the Census bureau, the Department of Labor? Have you checked the S&P Industrial Outlook, or Value Line, Moody’s?
- A realistic proforma.
- Excellent business plans that get funded anticipate problems. Why?
- Investors are realists. Problems are inherent in any business. By addressing them in your business plan, you build credibility.
- Investors recognize you as proactive, pragmatic, and insightful, instead of reactive.
- We have ample opportunity to evaluate your problem solving and decision making skills.
- We have the opportunity to evaluate your consensus building and leadership skills. (We are going to give you input)
- What kind of problems am I talking about? Production problems, service issues, operational, financial and personnel problems that are a fact of life in business. Why is this important? Because its going to happen. Something. Irrelevant of planning, your team, or capital, you will face challenges. It’s business.
5. A superior marketing & sales plan. How are you going to grow your business?
Many people have a problem here. P.T. Barnum died one of the richest men in the world. And he was a brilliant marketer. Do you know what he did? Every time he went into a new town, he paraded through the town to let everyone know the circus had arrived. He was a brilliant and shameless promoter. He said there was no such thing as bad press. Barnum died in 1891. Who is P.T. Barnum of 2007? Donald Trump. He’s a brilliant promoter. Think along the lines of There are hundreds of real estate developers in New York City, but how many do you know and hear from all the time?
You HAVE to think the same way in building your business. If marketing isn’t your forte, then hire someone to figure out marketing for you. But a great business plan will have it’s strength in marketing and sales, without it you won’t be able to grow your business.
In my first company I changed the paradigm for the sales reps and inside of 3 months I raised initial capital of $2.5 million and struck a deal six months later.
The point is there are twenty five ways to skin a cat………..VCs, private equity, angel investors are not the ONLY answer to a start-up. In the case of Google for example, if I needed funding where would I have gone? I would have started with Microsoft because who needs new technology?
After that I probably would have gone to Apple, GE, IBM. Intel. In other words you don’t start with one company on your list. You start with 20 companies. When I have my mind made up about something. There is no stopping me. You have to be the same way.
So what do you need? A KILLER business plan. And how do you blow them away? Anticipate every question, every objection, every-possible problem and have a CREDIBLE answer. Every time someone asks a question, you need to be able to look at them as say,
“Its in here, we just haven’t reached that part yet.”
Copyright Ev Nucci 2007
5 Comments
March 26, 2007 at 7:16 pm
Good site! kabababrubarta
April 5, 2007 at 7:57 pm
I completely agree with your premise that an 18-month implementation plan is essential. Yet really most business plan “outline formats” and Business Plan Books do not have this as part of a standard business plan. Nevertheless a smart entrepreneur having hopefully done it all before would be wise enough to have this available and really, know it off the top of their head at the snap of their fingers, I always do. Down to the most minute detail in fact, you have to if you want to win.
Not long ago I visited a college in Los Angeles to give a speech then decided to head on over to the USC Entrepreneurial Program across town. They were closed, I was surprised since true entrepreneurs have such a passion that the students should still be there sitting around doing work. So, I went over to the book store on campus and bought all the “Entrepreneurial Course Books” and yes I way over paid for them, smile (publish or perish as they say). So much for capitalism and free markets, a definite monopoly there with college text books, indeed reflected in the price.
The point is that the 18-month implementation plans are simply not given the proper value they should be. Without the proper foundation being laid, how can the business expect to handle the future chaos that will ensue during the “fly by the seat of your pants phase” which is often the most fun part.
Secondly, when I give speeches to MBA students, they seem totally clueless in the WOTS analysis as you indicate. Of course they are young and wet behind the ears, but they ought to know what is going on. It seems that the MBA students do “set up a fake company” business plans and think this is good enough in the real world. One company I started had a 400 page business plan, which of course was abbreviated to 40 pages down to two + two (executive summary and outline). But we had “ALL” the information to back it up.
Indeed if you want to win you have to know “Everything” about “Everything” in the industry, competing subsectors, trends (real trends, not the BS) and all the realities and created realities surrounding the future endeavor. If not you cannot finish first and Vince Lombardi would not approve. I recently met a gentleman working with some new advances of old aerospace technologies wishing to take it to a whole new level. I sent them some “Trade Journal” online newsletters and they basically said yes, but we are looking for 50 million dollars and this is not important information? Says who?
In that very trade journal were co-partnering companies, vendors, banks catering to the industry, investment bankers, etc. Besides that, you need to know this information anyway. You have to know what you are talking about. Not only to secure funding, if you need it, but simple to insure survival.
Your blog post hits home and it is something I too have noticed out there, too bad really. More entrepreneurs wish to skate by, rather than hitting a home run. Without the practice, observations, knowledge and insight, they somehow think they deserve to win on BS alone? I wish it were not so, unfortunately this is what I see. Interesting topic indeed.
April 5, 2007 at 8:59 pm
Lance,
Thank you so much for your comments and your thoughts. Its refreshing to know that someone else agrees with my high standards and expectations. For the last ten years I was amazingly shocked how few of the “brilliant” men knew how to write a business plan, but even worse, were willing to put in the time and energy to bring to fruition their so called dream.
I would lead them to resources, give them outlines I expected them to follow, and repeatedly I was disappointed. Success is so much more than a mindset…its the refusal to give up. The quest for excellence. And you are absolutely right…know everything about everything.
April 18, 2007 at 7:05 am
Indeed. As a retired and sometimes part-time business consultant for fun money, it amazes me how entrepreneurs who have made it in other endeavors are ready to start another adventure. Some how they believe that their past successes, entitle them automatic success in the next endeavor.
The truth is the second, third or fourth business success if you make it that far is actually a little tougher because you must at all costs resist thinking ‘you know it all’ and can do anything, therefore you get an automatic pass to the next new thing at the high-tech skate park. It just does not work that way. It amazes me when folks from other industries, drop into one of my areas of expertise and believe that they know how to run a business, all businesses are the same and the details are irrelevant, they can do anything.
It seems they fail to realize the level of hard work ethic, energy and knowledge that helped them win in prior periods in other industry sub-sectors.
April 18, 2007 at 10:11 am
I couldn’t agree with you more Lance. The fundamentals of business are not unique to any industry. Those who think the fundamentals change based on the industry one is in, is a fool. For example, how could I move from such a difficult world as health care where I owned at company into the vast world of Wall Street? It’s all relatively simple for me.
Part of the fundamentals of business that are not negotiable and determine your long term success are integrity, intelligence, and perseverance. With all three anything can be accomplished. My integrity is not for sale. Never has been, never will be. I stand for what I believe in. And if people don’t like what I believe in, that’s their problem, not mine.
More times than I can count, many men have sat before me and discussed numerous ideas and business ventures. And more times than I can count I have walked away from business opportunities because I refuse to compromise my integrity. I am who I am and if someone doesn’t like it…they may go elsewhere.