A Look at Business Plans
A Look at Business Plans
Contrary to popular belief, no capital venture firm or “angel investor” hears a presentation or reads a plan and becomes so excited that he sits down and writes a check immediately. An Angel Investor is no different than a capital venture firm, bank or insurance company in his or her desire to make a prudent and sound investment. I have heard client’s state that Angel Investors or Venture Capitalists are no better than banks or traditional lenders because they want experience management, collateral, growth industries, and ability to repay the loan as well as significant returns on their investment. They thought an Angel Investor suspended all prudent business practices and just threw money into any project presented to them. Nothing could be further from the truth. Each venture capital source must present a detailed Business Plan to a committee or advisors to determine if further processing is warranted. The Business Plan is the door opener, if the plan is favorably received the company will proceed to the next step, due diligence.
What does the Lending Community want to see in a Business Plan? The projects that are selected achieve a business comfort level that encourages further pursuit. If the business is inherently unsound, a skillfully drafted plan can not cure the flaws, nor does a poorly written plan automatically condemn an excellent company’s chance for financing, however the poorly written plan
What do capital sources want to see in a Business Plan?
• What is unique about this company or project?
• What does the company do?
• How will the company succeed and attain profitability?
• What benefits will be derived from a capital infusion?
• Is management capable of implementing the Business Plan?
• Do the Financial Projections Make sense/are they realistic?
• Is there an exit strategy for the investor?
A Look at Business Plans
Page Two…
The Don’ts of A Business Plan
• Don’t provide only an income statement; include a balance sheet and a cash flow statement too.
• Provide monthly data for at least two years.
• Don’t provide more than two years worth of projections unless the lender or investor has asked for them.
• Don’t provide different scenarios in your projections.
• Don’t assume the numbers reconcile.
• Don’t be too optimistic about sales, growth or operating profit margins.
• Don’t forget to include all existing debts.
• Don’t forget to add reasonable interest rates for the loan you are seeking.
• Don’t forget to include assumptions to your projections, be able to explain as well as defend them.
• Don’t believe the investor will be the only one at risk
If the Business Plan is prepared properly and answers the questions as indicated above it has served its purpose. Remember that it is the job of the lender, venture capitalists or angel investor to ask questions.
Does the format and style of the Business Plan make a difference to an investor? It definitely does. Most investors look more favorably upon a Business Plan that is professionally prepared, easy to read, well laid out and written in acceptable business plan style.
The style of a good Business Plan is unique. It is between the syntax of a SEC document in which every aspect of the business is doomed to failure and a marketing piece in which everything about the business is wonderful. It is a factual document, but it also a presentation piece, in which the positives can be featured, but not overly emphasized, and the negatives are disclosed as well as explained.
An attractive professionally packaged Business Plan can be beneficial. Always set a positive tone, and don’t turn off the reader with a large number of pictures or a volume of the encyclopedia.
A Look at Business Plans
Page Three…
Should an existing business or start-up hire a consultant or professional business plan writer?
This is a question of time, ability and money. A typical Business Plan takes at least 20-50 hours to reach a final project when prepared by a professional. It will take considerably longer if a learning process or research process is involved. There are many software programs to serve as guides, but most of them not worth the price they cost. Business Plans require a high level of writing ability to draft the plan, a real understanding of the business environment and industry, financial knowledge of the proper accounting methods and preparation of budgets and projections. So the answer to the question is that if the business or start-up has the ability and the time, it is a feasible option.
Retaining a professional consultant has many advantages. Since a Business Consultant, who prepares Business Plans for a living, can be produced faster and written at a professional investor friendly level. The consultant is also detached from the business allowing for a realistic presentation of the business and its future. Investors can always detect a Business Plan prepared from a software package (“canned”) versus a professional prepared plan. Investors favorably note that the company or individual has gone through the expense to present a professionally prepared plan, understand the importance of utilizing professionals and are serious about their business. The cost of having a plan professionally prepared is small in comparison to the amount of money the average business is seeking. Business Plans usually start at $3,000 and can increase to $7,500 or more depending upon the complexity of the Business Plan.
A professionally prepared Business and Marketing Plan, designed by a Business Consultant, is usually an excellent investment for all businesses.
A Look at Business Plans - To learn more about this author, visit Accessible Business Consultants's Website.
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There are many clichés and misunderstandings surrounding Business and Marketing Plans than any other part of the capital raising process. These range from the belief that plans are not needed (my concept is so good it sells itself) to the “thicker the better” school of Business Plans. I have seen Business Plans that are over 100 pages that includes 25 pages of newspaper clippings and a scholarly treatise on the industry complete with an additional 20 pages of charts and graphs, which by initial sight is very impressive, but never read. The failure of this approach stems from a misunderstanding of the role of a Business Plan in the world of capital venture.
Contrary to popular belief, no capital venture firm or “angel investor” hears a presentation or reads a plan and becomes so excited that he sits down and writes a check immediately. An Angel Investor is no different than a capital venture firm, bank or insurance company in his or her desire to make a prudent and sound investment. I have heard client’s state that Angel Investors or Venture Capitalists are no better than banks or traditional lenders because they want experience management, collateral, growth industries, and ability to repay the loan as well as significant returns on their investment. They thought an Angel Investor suspended all prudent business practices and just threw money into any project presented to them. Nothing could be further from the truth. Each venture capital source must present a detailed Business Plan to a committee or advisors to determine if further processing is warranted. The Business Plan is the door opener, if the plan is favorably received the company will proceed to the next step, due diligence.
What does the Lending Community want to see in a Business Plan? The projects that are selected achieve a business comfort level that encourages further pursuit. If the business is inherently unsound, a skillfully drafted plan can not cure the flaws, nor does a poorly written plan automatically condemn an excellent company’s chance for financing, however the poorly written plan
What do capital sources want to see in a Business Plan?
• What is unique about this company or project?
• What does the company do?
• How will the company succeed and attain profitability?
• What benefits will be derived from a capital infusion?
• Is management capable of implementing the Business Plan?
• Do the Financial Projections Make sense/are they realistic?
• Is there an exit strategy for the investor?
A Look at Business Plans
Page Two…
The Don’ts of A Business Plan
• Don’t provide only an income statement; include a balance sheet and a cash flow statement too.
• Provide monthly data for at least two years.
• Don’t provide more than two years worth of projections unless the lender or investor has asked for them.
• Don’t provide different scenarios in your projections.
• Don’t assume the numbers reconcile.
• Don’t be too optimistic about sales, growth or operating profit margins.
• Don’t forget to include all existing debts.
• Don’t forget to add reasonable interest rates for the loan you are seeking.
• Don’t forget to include assumptions to your projections, be able to explain as well as defend them.
• Don’t believe the investor will be the only one at risk
If the Business Plan is prepared properly and answers the questions as indicated above it has served its purpose. Remember that it is the job of the lender, venture capitalists or angel investor to ask questions.
Does the format and style of the Business Plan make a difference to an investor? It definitely does. Most investors look more favorably upon a Business Plan that is professionally prepared, easy to read, well laid out and written in acceptable business plan style.
The style of a good Business Plan is unique. It is between the syntax of a SEC document in which every aspect of the business is doomed to failure and a marketing piece in which everything about the business is wonderful. It is a factual document, but it also a presentation piece, in which the positives can be featured, but not overly emphasized, and the negatives are disclosed as well as explained.
An attractive professionally packaged Business Plan can be beneficial. Always set a positive tone, and don’t turn off the reader with a large number of pictures or a volume of the encyclopedia.
A Look at Business Plans
Page Three…
Should an existing business or start-up hire a consultant or professional business plan writer?
This is a question of time, ability and money. A typical Business Plan takes at least 20-50 hours to reach a final project when prepared by a professional. It will take considerably longer if a learning process or research process is involved. There are many software programs to serve as guides, but most of them not worth the price they cost. Business Plans require a high level of writing ability to draft the plan, a real understanding of the business environment and industry, financial knowledge of the proper accounting methods and preparation of budgets and projections. So the answer to the question is that if the business or start-up has the ability and the time, it is a feasible option.
Retaining a professional consultant has many advantages. Since a Business Consultant, who prepares Business Plans for a living, can be produced faster and written at a professional investor friendly level. The consultant is also detached from the business allowing for a realistic presentation of the business and its future. Investors can always detect a Business Plan prepared from a software package (“canned”) versus a professional prepared plan. Investors favorably note that the company or individual has gone through the expense to present a professionally prepared plan, understand the importance of utilizing professionals and are serious about their business. The cost of having a plan professionally prepared is small in comparison to the amount of money the average business is seeking. Business Plans usually start at $3,000 and can increase to $7,500 or more depending upon the complexity of the Business Plan.
A professionally prepared Business and Marketing Plan, designed by a Business Consultant, is usually an excellent investment for all businesses.
A Look at Business Plans - To learn more about this author, visit Accessible Business Consultants's Website.
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David BarrDavid Barr is the President of Venture Opportunities, Inc. David has been a professional business broker/intermediary since 1980 focusing on General Business Brokerage and Mergers and Acquisitions representing client transaction value from $400,000 to $20,000,000. Mr. Barr has handled the sale of over four hundred and fifty companies. David earned a university degree from the State University of New York majoring in economics and business. David holds the Mergers and Acquisition Master Intermediary and the Certified Business Intermediary designations from the International Business Brokers Association. He is also a Senior Business Analyst and a Texas licensed Real Estate Agent. For more information about David and Venture Opportunities, visit www.bizdealmaker.com. - Visit David Barr's Website |
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Jeff FosterWebBizIdeas.com is a Minneapolis website design company founded to help people start an internet business by providing them with website, business, and internet resources that help foster the growth of successful online businesses and develop innovative Internet business ideas. We specialize in internet consulting & internet marketing. - Visit Jeff Foster's Website |
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David AchesonDavid Acheson is the founder of DCJA Consultancy. DCJA Consultancy is a management consultancy business specialising in B2B sales consultancy. They offer bespoke and packaged sales consultancy including Sales Optimisation Review, Interim Sales Management, Sales & Marketing Review, 1:1 Sales & Management Staff Analysis, Management Training, Solution Sales Training, Creation of New Pay Plan, KPI's, run Customer Feedback Campaigns, assist with Recruitment, Coaching, Appraisals and set up Strategic Marketing Campaigns. David spent his early career in accountancy and then moved into sales in 1982, working in Office Equipment, IT, Advertising, Training, Outsourcing and Consultancy. He has held many Senior Positions in SMBs and Global Organisations including Head of Sales Operations & Head of Business Development. His knowledge, skills and great experience of the Sales Industry has led to David making keynote speeches and running educational sessions to key businesses through organisations including The Chamber of Commerce and Business Link. - Visit David Acheson's Website |
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Leanne Hoagland-SmithAre your sales where you want them to be? Will you be one of the few who achieves sales or business success or one of the many who have failed to change? Are you tired of being told you are like everyone else? Then you may find my first book on sales of interest. Be the Red Jacket in the Sea of Gray Suits, The Keys to Unlocking Sales available at Amazon or at http://www.processspecialist.com/red-jacket.htm. This book is a reflection of my no-nonsense approach to improving sales to overall business results. If you are truly committed to making sustainable changes, then I can help you secure a positive return on your investment because I focus on executable solutions not telling you the problems you already know you have. From training to corporate (group) coaching to executive one on one coaching, my approach is to assess, create awareness, build a goal driven action plan and then execute. The bottom line question is "Not do you or your employees know it, but do you or they want to do it?" Please call for a free strategy session at 219.759.5601. - Visit Leanne Hoagland-Smith's Website |
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Cheryl MatthynssensCheryl is a life skills coach, licensed Chemical Dependency Counselor and a 20 year entrepreneur. Cheryl's dedication to achieving a life of balance led to her expanding her teaching from the simple managing of life's daily challenges to adding financial well being as well. A direct marketer with DrinkACT, she is gaining ground in the online community with her concepts of making sure business owners, entreprenuers and employees have well rounded life styles. She opened up a small affiliate site - The Balance Guide- to help others find resources for mental and emotional well being. Visit Cheryl's blog to see more of the diversity beyond business she has began offering online at www.thebalanceguide.blogspot.com - Visit Cheryl Matthynssens's Website |
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