The tangible
information that investors search for in a business plan is described in the
textbook, “Successful Business Plan: Secrets & Strategies”. The critical
& key components are (1) the
executive summary, (2) financials, (3) management section and (4) the exit plan. The potential business owner must outline, in
these sections, a solid foundation of where to take the business, with a strong
competent management team, that has extensive knowledge of the market or
industry. Projection of financial health
within the first 2 years requires specificity (monthly) and quarterly
projection for the next 3-5 years. Pertinent
areas of your business plan must be highlighted in order to capture
the attention of the reader, within 5 minutes; information that is important to
the investor should go in the executive summary.
Of course, no
one can blame the skepticism of a venture capitalist, that wants to be secure in
his or her investments. Stephanie Burns, a Forbes' contributor, interviewed venture capitalists that also rely
on intangibles ~ instincts, when deciding to go into partnership (similar to a
marriage) with a potential business owner.
Stephanie reports that what Barbara Corcoran, Investor on ABC Shark Tank is looking for is an innate
sense of trust that she either feels or doesn’t feel by following her
instincts. She admits that it’s not an exact science, but she has always
regretted not listening to her gut and it’s cost her money. Whereas, Joanne Wilson stated that she goes
by the 24-hour rule, “After meeting with someone I give myself 24 hours to see
if I am still loving the business.”
Chuck Blakeman
and Mike
Michalowicz debunk the whole notion of a business plan. Both believe that a business plan stifles
growth and is a waste of time.
Chuck Blakeman,
started 8 businesses, nationally and internationally, he is an accomplished
author and now serves as an advisor to the business communities across the
globe. He believes that there is no
conceivable way to plan extensively for a business, because there is no
absolute way to predict an accurate outcome. Therefore, one is wasting his or
her time in constructing one. Chuck
believes listing steps 1, 2, and 2.1, then allowing the other steps to grow
organically into whatever that may be.
What happens to one business is not going to be the same for your business;
even if they are the same type of businesses.
Mike Michalowicz
has a long list of accolades. He is a
comedian in his own right but also a self-accomplished business owner who owned
and sold two multimillion-dollar businesses by the age 35 and lost it all as an angel
investor. Mike currently owns his third
multimillion-dollar company and shares his knowledge to the business community
through his books and segments on television (i.e., CNBC's
On the Money,
Pat Croce's Down To Business). In an interview with
Kathy Caprino, a Forbes' contributor, Mike refers to a business plan as a "static
yardstick" and states, “Sticking fast and furiously to your business plan makes
you adhere to false tenets and assumptions, and that holds you back”.
I enjoyed
the various views on the importance of a business plans and what is important to Investors. I particularly, enjoyed what Chuck Blakeman
and Mike Michalowicz said on not being bogged down by the business plan and to
allow my mind to be free to receive the inevitable state of change, I will
embrace this idea and remain flexible.
P.S.
Chuck Blakeman wrote a wonderful article on the difference between the Mission vs Vision statements.
References:
Abrams,
Rhonda. Successful Business Plan: Secrets & Strategies, 5th Edition.
The Planning Shop, 2010. VitalBook file.
http://chuckblakeman.com/2012/5/texts/lewis-and-clark-your-best-business-heros
http://chuckblakeman.com/2012/11/texts/your-mission-is-not-your-vision
