A Guide for Business Owners and Entrepreneurs
How to Select a Business Plan Development Partner By: Scott McGarvey
Ground Floor Partners
Tel: (312) 726-1981
Email: Ground Floor Partners
Website: www.groundfloorpartners.comWhy Write a Business Plan?
Success in any business requires that you communicate the essence of the business in a clear and compelling way to investors, strategic partners, key management personnel and others. Your primary tool to do this is the business plan - a single, concise document that embodies all that your business is and all it aspires to become.
There are several reasons to write a business plan.
- Get your thoughts down in writing. This helps you commit to a course of action and tends to keep you from changing your business model every time you hear a different opinion from a customer or vendor.
- Clarify your goals to yourself and your partners. A well-written business plan can serve as an internal communications document and a road map for the next few years.
- Raising capital. If you intend to raise $100,000 or more, you almost certainly need a Business Plan for a successful raise. Investors demand it. Gone are the days when investors wrote checks for an idea on the back of an envelope. Investors want to see that you can think clearly, communicate, and execute according to plan.
Why Hire a Partner?
No single document is more crucial when presenting your venture to investors. So, don't go it alone. Use a qualified expert resource. Why?
- If you select the right partner, your business plan will be researched, written and produced by experienced professionals who are in daily contact with investors, and understand what they are looking for.
- Your time is freed up to focus on growing your business.
Selecting a Partner
Selecting the right partner to guide the development of your business plan may be the most critical decision you make. Here are some issues to explore and questions to pose when interviewing prospective partners. Make sure you get the answers you need!
"What are your qualifications?"
Does your firm's principals have qualifications and experience that extend across the full range of business functions - strategy, operations, finance, marketing, IT, and human resources?
Does your firm focus entirely on working with early growth stage privately held companies?
Does your firm introduce entrepreneurs to investors (rather than just writing business plans)?
"How will you work with us?"(This is fundamental! A quality work process results in a quality product.)
Will you customize the document to our enterprise (and not use a "one-size-fits-all" template)?.
When and how will we have opportunities to collaborate with you?
If you need further information in order to write a truly fact-based plan, will you tell us so that we have an opportunity to fill the gaps (rather than just filling the blanks with guesses)?
Will you show us work-in-progress at various points in the project to confirm that we are comfortable with the directions being taken?
Will you show a draft to real investors to get their feedback?
"Will our business plan, once complete, make a convincing case for our enterprise?"
Will the business plan begin with a concise but complete executive summary?
Will the business plan demonstrate that the market served by the venture is expected to grow and that customers will accept and use the product/service?
Will the business plan be supported by realistic, defensible pro forma financial statements?
Will the business plan prove that this venture has a strong potential to reward investors with 5 to 10 times their investment returned in about 5 years?
Will the business plan show how this venture has a wide moat with unique, defensible intellectual property or other effective barrier(s) to entry?
Will the business plan demonstrate how this venture has a sustainable advantage over competitors? (For example, based on an efficient business model, low-cost provider position, dominance in a critical market channel, solid customer value proposition, and/or strong customer community with high cost to switch.)
Will the business plan highlight the resources that we can bring to bear to execute - "marquis" strategic partners, quality suppliers and a top-tier management team?
How to Work with Your Partner
Once you have made your selection, your next step is to build a productive working relationship with your partner. At the outset of the project, make sure your partner understands your goals and vision. The first version of a business plan is almost never quite right, and your partner (and you) should understand this. Be willing and available to collaborate with your partner and rework as necessary until you see results that make you comfortable. A good partner should play devil's advocate by questioning your assumptions and proposing alternative approaches, at least for the sake of discussion.
If you have more time than money, you may be able to do much of the necessary research and write most of the business plan yourself. Rely on your partner to act as your advisors and editors, and guide you through the process.
Once drafted, your plan should be reviewed by a team of people, not just one person. Ideally, your partner's firm should have experts on call in marketing, finance, operations, strategy, and technology, to review your plan. If not, seek feedback from these expert sources through your own network or advisory board.
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Once you have found a business plan development partner that is right for you...Congratulations! You're now on the way to clarifying your own thinking about your venture and communicating it succinctly to those who are vital for its success. Ultimately, you've taken a major step toward seeing your vision become reality.
SIDEBAR: Key Ingredients of a Successful Business Plan
The objective of your Business Plan is to provide this information in a complete and concise format. In most situations, your Business Plan should include the following sections:
Business Model -- A description of how the business will make money, with magnitude and timing of each major revenue stream.
Customers -- Who are your present and prospective customers and what critical unmet needs will motivate purchase decisions? Estimate size (number of customers and revenue potential) of each market segment.
Customer Value Proposition -- A brief statement that describes a credible promise of value, delivered to customers in ways that distinguish your enterprise from anyone else in the industry.
Marketing & Sales Plan -- How will you attract and retain customers, deliver your product/service to them, and earn their loyalty?
Competition - Detailed description of the competitive landscape. If there are no direct competitors now, then who are your indirect competitors? Potential entrants?
Barriers to Entry -- Build a wide moat that protects your business from present and future competitive incursions.
Operations -- How will you get things done on a daily basis? This includes everything from research through production through sales and billing. What strategic resources (including alliances with other businesses) can reduce your cost of operations and give you the edge?
Management -- Detailed description of the management team covering experience, qualifications, talents, and industry connections.
Investment Opportunity and Exit Strategy for Investors -- What will investors get for their money and their time? When and how will they be rewarded?
Financial Projections -- Includes monthly cash flow projections (with all revenue sources and expenses included), pro-forma financial statements, marketing and sales costs, taxes, office space, development costs, etc.
Supplementary Materials -- Patents, trademarks, trade agreements, letters of reference, etc.
Scott McGarvey, Senior Consultant of Ground Floor Partners, Inc., has 16 years' experience in consulting and industry management, and has provided consultative guidance in marketing and general management since 1992. Scott works with small to medium-sized business clients to assess market opportunities, customer needs and competitive vulnerabilities, and to develop actionable strategies for profitable growth. Scott earned his M.B.A. degree from the University of Chicago in 1981.
See his Profile on Experts.com.
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