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Business Plan
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posted by Avril McHugh 08/04/2003
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How long should my business plan be?
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RE:Business Plan
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posted by alan clayton on 30/04/2003
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Dear Avril, All I can tell you is that having been through a structured business plan development process with an Ernst & Young competitor, with rigid paragraph layouts and tedious repetition to fill 20 plus pages.....it should NOT be that long ! What is great is the 24 page spreadsheet financial plan I cooked up with an accountant friend which I actually understand, play with, and which works when I present it to investors, bank managers etc. And I am NOT a finance man. If you want to make a plan impactful, I guess you have to do some boring bits, but really, it has to live for you as a working document. I reckon 6 pages of words max, plus a working financial model which spews out balance sheets, sales by month by product by distribution channel, P&L and cashflow should do it ! I do have friends who share my experience with this particular global accountnacy force. I'm just hoping Ernst & Young are better ! Alan Clayton CHOCaid.com
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RE:RE:Business Plan
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posted by Avril McHugh on 01/05/2003
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Thanks Alan, I've been doing some research since I posted the question on the site and believe your experience is not uncommon to most. I had an article published on this topic in The Sunday Business Post recently which received some good feedback. It will be distributed to the excellerator community via the monthly newsletter next week.
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What not to say in a business plan ...
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posted by John ODea on 19/05/2003
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I was directed to this recently on the net, not thankfully from a reader of our BP .. how many of us have broken one of these rules :-) John In a new U.S. brochure entitled "The Top 10 Mistakes Entrepreneurs Make When Asking VCs For Money" produced by by BeaconVentureCapital(BVC), a Web-based private equity firm, and the National Consortium of Entrepreneurship Centers (NCEC), an organisation representing more than 60 entrepreneurship centers at leading business schools in the U.S., 'fatal errors' are identified. "It amazes me how many people we meet today who have not thought through what they are going to say when asking for funds," said BeaconVentureCapital.com Managing Director John Groth. "With most VCs now proceeding in an extremely cautious manner with their money, it is increasingly important to avoid these easily correctable pitfalls." What NOT to do or say: Ignoring the Competition -- Perhaps the most frequently heard of ill-advised statements is that the entrepreneur faces "little or no competition." Since there is very little that is truly new, VCs begin with the premise that you have competition and the only question is whether or not you have some kind of competitive advantage that gives you a good shot at making it. In short, failing to show respect for your competition is a serious mistake when wooing a VC. Invoking the 1 percent Non-Solution -- Way too many entrepreneurs try to point out that "all we have to do is capture 1 percent of the market" in order to be a success. The problem is that too many entrepreneurs foolishly assume that such a small milestone is easy to achieve. In truth, the vast majority of companies never gain 1 percent or more of their total marketplace. Bragging About a Vapour Team -- So, you're planning to bring Colin Powell and Chuck Yeager on board in the next six months? Don't bother telling that to a venture capitalist. Your current team is your team for the purposes of lining up financial backing. It's the Questions, Dummy -- The rule of thumb for making presentations to VCs is to stay focused and be ready to cover all the bases. Operate on the following assumption: If you can anticipate the question from the VC, then you should have a concise answer prepared beforehand. You should come to the table with all relevant details about financials, the management team, definition of the product or service, the market, the perceived need and how you will meet it. The Gee-Whiz Mistake -- Too many entrepreneurs, particularly in the tech world, get caught up in the "gee whiz" aspect of their product or service and fail to clearly define the nature and size of their market. Too often, a VC will find that almost all of the entrepreneur's brainpower has been concentrated on producing his or her new widget, while the marketing side of the equation goes wanting. Weak targeting is a sure-fire way to get rejected by a venture capitalist. Like, Don't Tell Lies -- Misleading a VC is not only an error ... it is one that is likely to be exposed very quickly. A venture capitalist is like a professional poker player in that he or she develops a highly tuned ability to detect when someone is bluffing. Always disclose your current status. Prospective investors never like to find out during the due-diligence process that a company has two times more accounts payables than cash. Claiming a Patent Lock -- Perhaps more so than most investors, venture capitalists know that there are few, if any, "sure thing" investments in life. That is why claims of invincibility or inevitable success as the result of an existing or pending patent are unlikely to carry any weight with a VC. Even the best patented process or product is no guarantee of the success of an enterprise, which hinges on dozens of individual factors. Mom Was Right, Neatness Counts -- All too often business plans reach the desks of decision makers with no attention to grammar, spelling and just plain, old-fashioned neatness. Your written proposal is the first impression you make on a VC. Do everyone a favor and get someone to proofread the final proposal. Talk Until You're Blue in the Face -- Too many entrepreneurs making presentations to VC spend way too much time talking and virtually no time listening to the VC's questions. This frequently fatal error arises most often when the venture capitalist asks a question and the responding entrepreneur concentrates on trying to head off what he or she thinks is the next question, rather than simply answering the one at hand. Tout Your "Conservative" Numbers -- Make sure that what you are projecting is realistic and based on some kind of defendable data. Don't try and reassure the VC by claiming that your estimates and projections are "conservative." It is safe to assume that the venture capitalist has heard this hollow reassurance dozens of times and stopped listening some time ago.
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Structuring
