Business Plan Development

The goal for most of you is to get investor funding for a great business idea. Writing a great business plan is a requirement for getting venture funding. It is not difficult to write a business plan or executive summary that looks good enough to get an initial investor meeting, but most business plans do not have the depth and rigor of real business planning and do not get funded. Business planning is the process of planning ahead for success and then executing on that plan. This site goes through the elements of both business planning and the business planning documents you need to prepare in order to have a great chance of being funded.

The situation:

• You are going full speed starting up/running your company…
  
• You have an Executive Summary outlining your business idea…
  
• Investors are interested, but you haven’t seen any money…
  
• You know you need a real business plan so more people can understand and fund your concept, but…

…business planning is hard

·        A great business plan requires…

a)       significant research and strategic thinking about the direction of the business 

b)       the entrepreneur to challenge deeply-held beliefs about the product/opportunity/market

c)       time commitment away from running the business

d)       a level of detail and process that are painful for the typical entrepreneur

·        Strategy is all about making choices…generally tough ones.  The best strategies emerge from making the best choices

·        Exposes your idea/thinking to critique

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Your business plan is more than a hot product or hot market: 

•            Most entrepreneurs focus on either the market or the product – focus needs to expand beyond typical starting points

•            Investors look for integrated thinking.   They look at the --

a)       competitive landscape and how it impacts the go-to-market strategy and pricing …

b)       …which impacts the sales and distribution tactics and financial performance

•            You don’t have to have every detail worked out, but your business plan must present an action plan to get there for every element in order to get past the angel or seed round of financing

Business planning is an iterative process of fact gathering, strategic planning, tactical planning, and review.  The business plan is a document you write at the end of the process, and serves as the roadmap for your business for the next 12 to 18 months.

 
Sharpening Your Story – Outside Review:  

•         An outside perspective and constant testing and revision during the business planning process is critical to sharpening your story  – it is easy to be in love with our own idea

•         Get at least 3-5 outside reviews (not including your mom)

•         Use friends, business leaders, Board members, consultants – anyone who has industry experience

•         Keep confidentiality in front of mind – keep tabs on confidential documents; get non-disclosure agreements signed if possible – though this is tough

•         The outside review process ought to hurt and challenge your thinking or you are not getting the preparation you need for the funding process

Order of Outside Review: 

•         Test with “friendly” reviewers first – trusted friends with business expertise – those who know you are early in the planning process – but don’t waste your time on those who won’t give hard, frank feedback;

•         Test with friends of friends with relevant business expertise next as “practice” for the investment community

•         Finally take your story to the Investors

Solid planning produces several documents that describe the business venture and each document serves a different purpose in the funding process.

PLUS, all of the documents above must be backed up by a rigorous financial planning and forecasting model.

Once you’re done with your plan documents you are ready for the fundraising process:

•     Start making contacts in the investment community before your plan is done

•     Prepare for in-person meetings.  The depth of your planning and knowledge of what is off the page of the summary Investor Presentation slides will make the difference – this is why planning is often more important than the written pitch! 

•     Debrief after every investor meeting – think about the questions you were asked and how you can better prepare for the next meeting – don’t schedule your most important meeting first.

•     Once you are on the Investor radar screen, you will likely deliver documents about your opportunity in the following order:

Crafting a Business Plan Presentation:

The following slides present the components of a good business plan (whether written or in slide format)

•              30-50 slides describing major elements: concept, business strategy, operating plans, and expected financial results. 10-15 page subset can be used as leave-behind investor pitch

•              Graphical in nature to powerfully and simply convey complex ideas; tells the whole story

•              Complete and simple enough to be used by anyone in the startup firm to explain and sell venture opportunity and enough depth that investor can use to sell colleagues

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