Writing Your Executive Summary
If you are starting a company and will be looking to attract banks and investors to your cause; you might want to put a little thought into an Executive Summary.
Basically, an Executive Summary is just that; a synopsis of your Business Plan and goals. A one page summary should be akin to an ‘elevator speech’. This means you could tell a Venture Capitalist (VC) your whole store on the ride from the 1st to 10th floor in an elevator. The concept is that your plan is so clear; it doesn’t take very long to sell its virtue. This is usually very difficult for the new entrepreneur, who would rather ramble at length about every minute detail of their ingenious venture. Unfortunately, no one has the time or interest for all this wisdom; so make it short and sweet.
First, clearly state what you are doing. (Revolutionizing the current awareness of business development into a new paradigm; really doesn’t work and just pisses people off). Try, Wireless email Advertising or Eco-friendly Flooring and you’ll connect with the right people.
Second, declare a reasonable target market. We know there are over 250 million in the USA, so be a little more realistic. For example, if I sold 10 a week to start and 50 a week by the end of year one that would only be 1% of the market in this county.
Third, briefly explain why you have a competitive edge in this market. “I’ve been in this industry for 25 years,” SUCKs as a reason; make it tangible.
Final, explain how much capital you need and where that will take you. With $100,000 in Equity Capital, we are confident that we will be able to manufacture, distribute and begin an aggressive marketing campaign for our lead product, into Pizza restaurants across the state. Our management is confident that this extra capital will allow our company to grow to $500,000 in annual revenues in two years.
If you can’t get your ideas down on one page or you are afraid someone will steal your idea; then you are just not ready to start the business.
BusinessPlanWriterPro
Saturday, November 14, 2009
Sunday, October 4, 2009
Raising Capital and Staffing Your Company
Very often an entrepreneur will conceptualize a product, chart out a marketing plan and proceed to ‘boot strap’ their business, pretty much a cappella. At first this seems to work well. There are no arguments, low costs, your ideas seen very clear and doable.
The first problem arises when you take this neat little package to an investor. You know what you’re doing. You got the company this far and you will hire some people down the road after things are really going good. So why can’t you raise any investment capital?
The answer is more obvious that you might think. No one wants to invest in a ‘One man show’, because men break. We get sick, have accidents, family problems or can at times just become overloaded. If you are the only one making the company function, then if anything happens to you, the company stops running.
This is why it is key to build out your personnel early. Ask your accountant and the lawyer who drew up your articles of incorporation to be consultants. Seen out like minded people who can add to the development of you dream and let them in. Hire energetic younger employees and make them your protégées.
If you are not a people person, find one and let them help you build your team. Angel Investors and Ventura Capitalists will treat you in a completely different light once they see that you have created a machine that runs irregardless of any one individual.
You may still be a critical part of the equation, but the formula for success will already be written down.
BusinessPlanWriterPro
The first problem arises when you take this neat little package to an investor. You know what you’re doing. You got the company this far and you will hire some people down the road after things are really going good. So why can’t you raise any investment capital?
The answer is more obvious that you might think. No one wants to invest in a ‘One man show’, because men break. We get sick, have accidents, family problems or can at times just become overloaded. If you are the only one making the company function, then if anything happens to you, the company stops running.
This is why it is key to build out your personnel early. Ask your accountant and the lawyer who drew up your articles of incorporation to be consultants. Seen out like minded people who can add to the development of you dream and let them in. Hire energetic younger employees and make them your protégées.
If you are not a people person, find one and let them help you build your team. Angel Investors and Ventura Capitalists will treat you in a completely different light once they see that you have created a machine that runs irregardless of any one individual.
You may still be a critical part of the equation, but the formula for success will already be written down.
BusinessPlanWriterPro
Monday, September 28, 2009
Setting An Equity Value For Your Start-Up
One of the biggest challenges for the management of early stage companies is setting a realistic Equity Value for their company.
There is popular TV show airing on ABC called ‘Shark Tank’ that exemplifies this conundrum for entrepreneurs. On the show a panel of self-made tycoons grille founders of early stage companies as to why they should invest in these new ventures. Almost every entrepreneur gets stuck on valuation.
In a nutshell:
What counts
1. How much revenue has the company made. ( Has anyone bought anything ?)
2. How much cash have the founders put in.
3. Do you have market controlling patents?
4. How do you compare to the competition?
5. What percent of the market can you reasonably capture and hold?
6. What is your profit margin?
7. Has any of the management been successful with a start-up before?
8. Does the public know your product exist? ( How will they find out?)
What Doesn’t Count
1. We’ve worked on this for 9 years! (We don’t care)
2. My family ran a grocery store in Queens, NY! (But this is an Enterprise Software company)
3. There is no real competition! ( You are delusional and could probably beat Venus Williams at tennis and Michael Jordan in a 1-on-1 B-ball game)
4. I’ve worked in this field for 15 years; no one else could do this. ( See #3)
5. We have a team of experts! (Who are all working real jobs for other companies.)
6. This is a $10 Billion market and we will be making $100 million by year three. (If this was true, AT&T, Google or Pfizer are WAY ahead of you.)
7. We don’t want to loose control of the company. (If you don’t get the business rolling and generating value, what is there to loose?)
In short, be humble, keep it real and do anything legal to get the capital that will help you build a successful business.
There is popular TV show airing on ABC called ‘Shark Tank’ that exemplifies this conundrum for entrepreneurs. On the show a panel of self-made tycoons grille founders of early stage companies as to why they should invest in these new ventures. Almost every entrepreneur gets stuck on valuation.
In a nutshell:
What counts
1. How much revenue has the company made. ( Has anyone bought anything ?)
2. How much cash have the founders put in.
3. Do you have market controlling patents?
4. How do you compare to the competition?
5. What percent of the market can you reasonably capture and hold?
6. What is your profit margin?
7. Has any of the management been successful with a start-up before?
8. Does the public know your product exist? ( How will they find out?)
What Doesn’t Count
1. We’ve worked on this for 9 years! (We don’t care)
2. My family ran a grocery store in Queens, NY! (But this is an Enterprise Software company)
3. There is no real competition! ( You are delusional and could probably beat Venus Williams at tennis and Michael Jordan in a 1-on-1 B-ball game)
4. I’ve worked in this field for 15 years; no one else could do this. ( See #3)
5. We have a team of experts! (Who are all working real jobs for other companies.)
6. This is a $10 Billion market and we will be making $100 million by year three. (If this was true, AT&T, Google or Pfizer are WAY ahead of you.)
7. We don’t want to loose control of the company. (If you don’t get the business rolling and generating value, what is there to loose?)
In short, be humble, keep it real and do anything legal to get the capital that will help you build a successful business.
Thursday, September 24, 2009
Business Plans and Raising Capital
Business Plans and Raising Capital in 2009
Even if you are going to ‘friends & family’ a good business plan is critical if you want other people’s money invested in your company. If you are going to seek funds from a bank, angel investor or Venture Capital Group (VC), it better be a very good plan custom written for your company specifically.
First of all pay attention. Don’t get patronized. Any group that offers to write you a business plan for a fee and also claims that they will show the plan to a network of private investors, VCs they know or a list of top banks that they work with is telling less than the truth. Think about it. They don’t know you. They haven’t written the plan yet. How could they know you are fundable and worthy of risking their reputation on before the details of you company are laid out? Would you bet 10% your net worth on a horse and then ask which horse did you bet on later?
Second, if you are not just coming out of a comma; you know times are tough. VC investments in the first quarter of 2009 were 50% of the amount invested first quarter 2008. At $3.9 Billion that’s the lowest level since 1998 when the Dot-com bubble burst.
So there is still money flowing just not as much as in the past. That means your management team, product or service and your company’s competitive advantage in your market better produce a cash flow that will generate an attractive return on the investment you are asking for.
As far as a bank or Small Business Administration (SBA) loan goes; the atmosphere is just as thin. Besides the above list VC requirements you will also need FICO scores over 720, several years of the company’s and the management’s past tax returns.
This brings us back to the beginning. Early stage and growing companies can still get capital to build and develop. First, however, put together a custom business plan that answers the questions the banks and investors will be asking.
It will make you life much easier.
BusinessPlanWriterPro
Even if you are going to ‘friends & family’ a good business plan is critical if you want other people’s money invested in your company. If you are going to seek funds from a bank, angel investor or Venture Capital Group (VC), it better be a very good plan custom written for your company specifically.
First of all pay attention. Don’t get patronized. Any group that offers to write you a business plan for a fee and also claims that they will show the plan to a network of private investors, VCs they know or a list of top banks that they work with is telling less than the truth. Think about it. They don’t know you. They haven’t written the plan yet. How could they know you are fundable and worthy of risking their reputation on before the details of you company are laid out? Would you bet 10% your net worth on a horse and then ask which horse did you bet on later?
Second, if you are not just coming out of a comma; you know times are tough. VC investments in the first quarter of 2009 were 50% of the amount invested first quarter 2008. At $3.9 Billion that’s the lowest level since 1998 when the Dot-com bubble burst.
So there is still money flowing just not as much as in the past. That means your management team, product or service and your company’s competitive advantage in your market better produce a cash flow that will generate an attractive return on the investment you are asking for.
As far as a bank or Small Business Administration (SBA) loan goes; the atmosphere is just as thin. Besides the above list VC requirements you will also need FICO scores over 720, several years of the company’s and the management’s past tax returns.
This brings us back to the beginning. Early stage and growing companies can still get capital to build and develop. First, however, put together a custom business plan that answers the questions the banks and investors will be asking.
It will make you life much easier.
BusinessPlanWriterPro
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