Years ago, after I had started my first company a friend of mine, asked me for my business plan. I guess he figured if she can do it, it can’t be that hard.
I gave him a copy of the plan I wrote for the first company I owned and raised a few million in operating capital. A few months later, he asked me to read his business plan and asked for feedback.
“I read your business plan a few times and am confused. What are you selling? What’s your market? Who are selling to? Who’s your competition? Who are your customers anyway? You don’t have a three year proforma in here…I’m really sorry, but I’ve read it twice and I’m confused.”
“You obviously don’t understand the industry.”
“Do you still want my feedback?” I smiled and he nodded.
“Here’s the problem. Your business plan is a communication tool. Everyone needs to be able to understand it, doesn’t matter who they are or what they do. Here’s the other problems:
- You are asking for $6 million in seed capital. That’s probably a little high for seed money. You’re better off telling them you believe in Santa Claus.
- The résumé of the chairperson is ten pages long. I can understand that if you’re the previous Secretary of State…but otherwise it’s a tad over done. No more than two pages, otherwise it’s pretty much BS.
- The CEO has no REAL management experience and screaming at your friends doesn’t count. The President is the only one with management experience, and you have no one running sales. Put your CEO into the role as VP of Sales. With your management structure I could have been in charge of NASA!
- If I don’t understand your business plan…doesn’t matter what the industry is…you aren’t communicating and that’s a problem. Unless your audience belongs in the zoo they will be totally confused!
- You don’t have a WOTS analysis and that tells me you haven’t done any due diligence, or you haven’t done the due diligence necessary. It tells me you’re sloppy.
- Now if you don’t understand why these issues are important, let me know and I’ll explain them more fully.” (Course I didn’t include the comedy routine..and was much nicer…I’m doing this for your reading enjoyment!)
“You just don’t understand the industry.”
Fifteen years later they never received a dime of funding. What did they need to do? The following:
- Ask for a reasonable amount of seed money, which depends on the industry but for the purposes of his plan it wasn’t more than $2 million. (seed capital)
- Seek council from a number of people.
- Cut the Chairman and CEO to Vice President of Sales. Make the President the CEO & President.
- Re-write every resume into a one-page curriculum vitae for a business plan.
- Give your plan to ten people and if they don’t understand it…rewrite it again. Give it to ten more people and if they don’t understand it…write it again.
- Do a clear and succinct WOT analysis. Weaknesses, Opportunities, Threats and Strengths.
- Do a superior competitive analysis…no BS
- Put all possible negatives into your plan because your investors are thinking it anyway. You demonstrate pragmatism, preparedness and foresight and in doing so build credibility. The pink elephant is standing in the room. You might as well address it!
Copyright 2007 Ev Nucci
ev nucci
18 Comments
August 2, 2007 at 12:45 pm
Interesting read- I have been talking with a client this last week, of mine about doing her business plan, and so I thought this would be a pretty timely read. I agree with the idea that a business plan is a communication tool and that some business plans are clearly lacking. Not sure if I agree so much with sticking “every negative” into your plan, for some new business owners that could be a stumbling point and a fixation- and for investors that could be a major turn off. Realistic is good, I agree but too much negatives and no one will want to touch the project. JMO- I’ll be back you have a lot of great recourses on here. -Michelle
August 3, 2007 at 11:37 am
Michelle,
You bring up a great point. When I say every negative what I mean by that is every negative that the investors are already thinking about anyway…it’s clear as day that they are there and if you don’t address the negatives…they will think you are an idiot! So, I’m not talking about negatives like you only have five years of management experience versus your competition have 10 years…I mean negatives such as realistic competitive threats such as economic government issues. I should have been clearer in my negatives, so thank you for addressing that issue!
August 3, 2007 at 7:44 pm
I got you- I am all for realistic. -Michelle
August 7, 2007 at 3:03 pm
Howdy?? Pink elephant standing for self confident or what??
From my thought, you maybe a manager or own a company or something right Ev?? 
i was been a manager to other peoples. But just have experience be a manager of myself only 
August 8, 2007 at 2:42 am
People can take their business So personally. I catch myself doing it, asking people for feedback on the blog and then being defensive about “constructive criticism!” I try and set my emotions aside and realise that I am getting feedback from a real live reader other than my grandma and you of course! Anyhoo, let’s make a deal, if I ever get out from behind a news desk and on camera, and if that should lead to me getting a daytime talk show, which has always been my dream, (that is a lot of “if’s” … but this is also the longest run-on sentence in the history of the world)when my Daytime Empire begins to grow, I want you on my team of advisors! You are one smart cookie! Take care friend and excuse my HORRID sentence structure.
August 8, 2007 at 11:37 am
Mike needs money, too. Ev, do you still raise capital for startups?
You know how to reach me, and I have some good projects.
August 15, 2007 at 11:10 am
Mike, I don’t raise money anymore!
August 28, 2007 at 7:27 pm
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September 3, 2007 at 5:44 am
Hi Ev
You’re so right that negatives! When ever I’ve tried to raise money – verbally or on paper – I’ve always found it best to be (as you say here) honest and clear. Cut the BS and – above all – don’t fool yourself. It’s easy to get carried away with the Excel spreadsheet that produces that lovely hockey stick revenue chart. As you say, Ev, give it to someone who will give you honest advice on clarity and feasibility.
All the best
Don
September 9, 2007 at 8:09 pm
great article, really enjoy the blog.
September 18, 2007 at 9:38 pm
LOLLLLLL
Yer Comedy Routine is Hilarious!!
Keep it IN whatever U do Ev!
cuz U always make me Smile!
September 20, 2007 at 1:56 pm
Billy,
I’m glad I make you smile. I was afraid some people wouldn’t get the comedy or the sarcasm…so I figured I better explain it to them!
September 20, 2007 at 1:57 pm
Oh Billy…trust me…many don’t get my humor. Lordly…God forbid somebody laugh in business! I’m ROTLMAO ON AT THAT ONE!!!
October 26, 2007 at 2:23 pm
thanks for the comment and the visit in my blog
February 3, 2008 at 10:23 am
Lovely way of presenting a business plan… while i was reading it, i felt like a businessman myself… written in plainspeak that anyone without a management degree can understand… u hav a gift of not writing what you are already practising… which makes it a double whammy for anyone who wants to benefit from your experience…
Pls keep penning and i will keep reading!
peace and luv,
Z
February 3, 2008 at 10:24 am
Lovely way of presenting a business plan… while i was reading it, i felt like a businessman myself… written in plainspeak that anyone without a management degree can understand… u hav a gift of writing what you are already practising… which makes it a double whammy for anyone who wants to benefit from your experience…
Pls keep penning and i will keep reading!
peace and luv,
Z
February 3, 2008 at 2:05 pm
Z, thank you very much. I really appreciate your input…you have no idea how much that means coming from you.
February 5, 2008 at 12:17 am
U r welcum, Ev! Pls write more on stuff like this… also, it would be nice if you could recall all your successful business meetings in anecdotal form, with dialogues and stufff… wil make it even more riveting reading… and who knows, some Hollywood producer might actually want to make a film inspired by this tete a tete!
Z