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Business Plan – 5 Signs Your Plan Will Come Up Short With Investors

Without further hesitation, here are 5 signs your business plan will come up short with investors:

Sign #1: You’re Selling What?

You know what you sell. But has your business plan clearly and concisely described those products and services? Too many business plan writers make the incorrect assumption that the reader is as familiar with their business as they are. Unfortunately, this assumption leads to a quick and final “no” from lenders and investors.

Instead, define and describe your product for someone who knows nothing about your industry. Be sure to include not only the features of your offering, but also the benefits. Tell the reader what need it fills, why it’s better, faster, or cheaper or how it can improve their life.

Sign #2: “I Sell To Everyone!”

Do you? More than likely, you sell to a very specific group with the need and desire to purchase your product or service. Understanding your target market can be the difference between success and failure. It allows you outline the benefits important to your clients, enables you to focus your marketing efforts to reach the right audience, and forces you to determine the most cost effective channel to get your product in the hands of paying customers.

Define your customer in as much detail as possible, including demographic traits as well as more subjective items such as lifestyle and personality types.

Sign #3: Your Competitors Know You Exist

A business plan lacking a comprehensive competitive analysis is destined for the trash can of most investors. In order to avoid this fate your business plan should include a thorough analysis of your competition. Experienced capital sources know that competition exists, but they also know that competitive forces can have a very positive effect on a company’s attitude and performance. Remember, Coke has Pepsi, Microsoft has Apple, etc. Be sure your business plan identifies who your competitors are, what they sell, what market share they hold and their strengths and weaknesses.

Sign #4: Even Batman Had Robin

No one ever said running a company was easy, and with the lack of hours in a day (only 24 hours as far as we can tell), a well rounded TEAM of people is often critical to the success of a company. Most capital sources view one-person operations as limited in terms of time, experience and core business skills necessary to launch and grow a serious business. They also expect a team of professionals that are highly competent in each business function (marketing, sales, operations, finance, manufacturing, engineering, etc.). Once you have assembled your team, be sure to provide your business plan reader a thorough description of the background and job responsibility for each, along with a discussion of your board of directors, board of advisors and key consultants.

Sign #5: An Exit Strategy – Without An Exit, Or A Strategy

A business plan is an excellent tool to plan a business or to raise capital. However, when seeking capital don’t forget that an investor’s commitment hinges upon their ability to recoup their initial investment and a healthy profit. The lack of a solid and realistic exit strategy demonstrating how investors will accomplish this goal can immediately turn off many sources of capital.

When deciding upon an exit strategy, be sure to take into account your particular industry, business life-cycle, competitive environment, and management needs. It’s also important to consider your personal and financial goals, and how they relate to the future of your business – without forgetting that an exit strategy must meet the needs of the person who will ultimately write you a check.

Business Plan – Write it in 140 Characters

I stumbled on a very interesting article that lead me to a very interesting competition. The article appeared in the New York Times on Friday 16 April with the following heading, “Can You Write a Business Plan With Fewer Than 140 Characters?” The article was written about a competition being run by the Massachusetts Institute of Technology (MIT) in conjunction with their MIT $100K annual business plan competition.

They call it the TWITCH (Twitter Pitch) contest. And this brings me to the topic for this article, “How long should your business plan be?” Here are some of the advice you may find on the Net:

 

  • It can vary from a 10 to a 100-page document;
  • It should be short enough to not bore your reader;
  • The shorter, the better;
  • Shouldn’t take up more than 25 pages;
  • Limit the plan length to 15 pages;
  • 15 to 25 pages is the optimum length;
  • Basic plans are under ten pages;
  • Comprehensive plans are often 10-25 pages long;
  • Length should be 20 to 30 pages max;
  • Can be any length.

 

The general feeling is that shorter is better. A few factors should dictate the ideal length of your business plan.

The nature of your business – The simpler the shorter, the more complex or “new” the longer.

Purpose of the plan – To raise millions may have to explain a lot more.

We personally believe that the shorter the better as long as it achieves its objective. One expert said that “A business plan needs to be whatever length is required to excite the investor, prove that management truly understands the market, and detail the execution strategy.”

The “empathy” test, once the business plan has been done, is to put yourself in the shoes of the audience and to ask yourself if you would have done what you want them to do based on what you see and read.

If the plan does not pass your “empathy” test there may be several reasons for that and one of them may be incomplete information. This will require that you add more pages.

If one looks at the advertising industry the greatest challenge is to sell a product on the TV in a 30 seconds commercial. Can you sell your plan in 30 seconds? We therefore go for the “Short is good, long is bad.” approach. When we look at the various areas that should be covered in more detail we will endeavour to indicate how long each section should ideally be.

In the next article we’ll have a look at the concept of the “elevator speech” and how that can become a powerful tool in business planning.

Happy planning. Make it a challenging, exciting and creative experience.

Leadership Skills – Winning over your Team Members

Effective Leadership is essential at any level of Management in Business. From the newly appointed Supervisor to the Senior Company Director, the core role of a Leader is surprisingly very similar. The Leader is responsible for Leading the Followers, their Team, and taking them to a predetermined destination. HOW the Leader gets the Team there, how they achieve their own and their Team’s objectives, is the complex bit involving the effective use of lots of Leadership skills, processes, motivators and tools. The beginning is very simple, win over your Team Members.

Where many Leaders become very ineffective, and fail, is in not understanding this very first step. If I have not won over my Team Members individually, and my Team as a group, then all the later steps will not work effectively. The first set of Leadership Skills involve winning over your Team Members, persuading people to work with you and later persuading them to go in the direction the you need them to go.

Who do People Follow?

At a very basic level, people follow people they know. If I don’t know you, I can’t trust you or respect you. Take time to BOND with each of your Team members, and build a habit of doing this with each of your Team members on an ongoing basis, not just new recruits.

Bonding is where we get to know each other. We spend a short time socialising, talking about non-work topics. It might only be 10-15minutes each week, but this is our one-to-one ‘personal time’ and it is time well spent. Here the Leader gives this Team Member their undivided attention, listening, showing interest and gaining a good understanding of how this person ticks. We are not ‘buddies’, the relationship is still Leader / Team Member. Also be careful to bond with all Team members equally, to avoid favouritism or isolating someone.

People Follow Someone they Respect

People also follow people who they can respect, and who respects them. The next step for the Leader is to spend time with each Team Member discussing their work and their performance. This is one-to-one time, but now we are talking about work rather than non-work. The Leader listens to the Team Member as he or she talks about their goals, performance, strengths, and achievements.

The Leader is showing an interest and demonstrating respect for the Team Member, praising achievements and suggesting possible next steps. The Leader is also positioning themselves in these one-to-one performance discussions as the Leader, worthy of respect. These sessions will later become coaching and mentoring sessions. But at first they are establishing the Leader, Team Member relationship.

Why do People Follow?

People follow the Leader firstly, if she is worth respecting, and secondly, if she is going somewhere I would want to go. The Follower will want to know where exactly you want me to go. what is the goal? They will also want to know why – what is in it for me if I go there? I will follow if I think this is worth doing and it is feasible, the goal and strategy to get there is doable.

This is what the Leader must satisfy in order to persuade the Team and each Team member to work with them. The best Leaders are skilled at painting that forward vision of where we are going – painting it as an attractive picture that is worth working for. To do this they must pitch the goal appropriately for this person or the Team at this point in time, using terms that would be attractive for this person.

They also persuade the Team Members WHY they should work towards this goal. What are the benefits of this goal – why it is good for the Company, good for the Customer, the Team and me, the Team member?

An important Leadership skill is the ability to deliver a motivational, goal setting talk to a Team Member or the whole Team. Both the goal and the talk is always planned and prepared carefully. The Leader’s time spent bonding with Team Members and building mutual trust and respect will be really useful here. The Leader’s personal knowledge of individuals will help ensure that the goal is appropriate, and the talk can be pitched perfectly. Equally, the personal knowledge will help the Leader AVOID saying something that would alienate or disrespect any Team Members. The benefits of the goal can be expressed using examples and language style that will appeal to this individual or the Team.

Winning over the Team and persuading them that the goal is worth following are the starting points in effective Leadership.