The Power of a Plan

The best thing that you can do for your business is to look for advice from people within the industry.  Experts in the field can help to steer you in the right direction, to aide in the development in your business plan, and hopefully help to get you investors.

If you do not have the funding to get your business off the ground on your own, you have a few options.  You can look for a loan, ask friends and family to contribute money, use your savings and investments, or look for investors.

Author, entrepreneur, business plan expert, and Angel Investor Tim Berry graduated with a MBA from Stanford, a MA in Journalism from the University of Oregon, and a BA in Literature from the University of Notre Dame.  He is also a teach, provides a curriculum for other teachers on how to write business plans, and does workshops on business planning.

According to Berry (2005), before any money is exchanges, investors are looking for:

• A management team with a proven track record.

While you personally may not have experience within your field, look for potential employees that can aide in the success of your business.  If you are able to find the right people, you and your business have a much better chance at succeeding.  Along these same lines, try and diversify the experience that your team has.  By doing so, you will be able to have many areas of knowledge and skills covered.  If everyone is equally qualified, with the same skills, then there will probably be at least one area or department in your business that has a high chance of failure.  Try and have them all covered, so that you will be able to succeed.

•  A defensible product with a competitive advantage.

According to Berry (2005), this involves having a tangible product.  By having something that can be physically purchased or give, you will have a much easier time predicting whether or not people will want or need it.  By having a service for the product, it is much more difficult to track the need and usage.  But, as long as the product or service is unique and there is a demand for it, the investors are likely to take a greater interest into your proposal.

• Reasonable valuation.

Going into any meeting, make sure that you know two things.  What your company is worth, or will potentially be worth, and know how much of the company's shares/ownership that you are willing to hand over to those investors, if this is your plan.  If you are overestimating the value of the company, the investors will think you are crazy, and will more than likely look no further into your business plan.  They will not take you seriously.

• A clear statement of the investment offering.

If you are truly ready and prepared for an investors meeting, then you need to have all of the legal documents prepared as well.  It lets the investors know that you are serious.  While there may be changes made to the documents before anything is signed, they will see that you are committed to this potential opportunity.

Berry continues stating that venture capitalists are also interested in:

• A shot at increasing the value of the company from whatever they think it is now to about 100 times that in three to five years.
• A plan that requires at least a $3 million investment -- in fact, the more the better.  Your plan has to show that the money is carefully planned and really needed.
• A plan that has several other similar investors ready to invest at the same time.  Venture capitalists find safety in numbers so they don't want to be the only investor in a deal.
• A clearly state exit strategy.  Investors like to see that you've thought ahead to how they're going to get their money back on the deal.

Chuck Blakeman is not only a successful entrepreneur, but also an author and business advisor.  He has built 10 different businesses across the world.  Blakeman has taken his years of experience within the business industry and now provides mentoring and peer advisory for business leaders worldwide.

In his blog, Blakeman says that "The problem is life.  It keeps getting in the way of our best plans, and no matter how well we plan how to get where we want to go, as soon as we start moving, the world and life starts messing with our plan.  It simply never works out anything like we planned, and the farther out we are planning, the less likely it is to work out" (Blakeman, 2012).  His idea is that while we can have our business plans in place, we cannot predict the future.  If we try to stick to this plan, then we will not be able to grow.  We have to take the twists and turns that we are given, and make them work to our best advantage.  The benefit that having a plan can give us though, is to try and work out any possible situation.  If we have a number of potential outcomes in place a head of time, we will have the best laid plan for handling them as they happen.  This way, we will not be completely shocked and thrown back when something happens.  We will have that plan in place, and our reaction to the potential disaster will be that much quicker, as well as being that much more effective.

The point that Blakeman is trying to make is that, as an entrepreneur, you can make it without having a plan.  If you close to have one, do not follow it too strictly.  Be flexible in your plan, it will take you farther if your are.  He says to "Never use "how" for long-range planning.  Use "why", "where" and "when" for the long-range stuff.  Once you know exactly where you want to end up and when, then ask "How do [I] get from where I am to the next step?"  Come up with a plan to get through the next few weeks, then ask short-term "how" again.  And do it a thousand times on the way to your objective" (Blakeman, 2012).  By continually reworking your plan, you will be keeping up with what life throws at you, the challenges that come your way.

Both Blakeman and Berry have very different views on what is important when starting a business.  While Berry's advice stated above is specifically directed towards acquiring investors, he believes strongly that every company should have a business plan.  Your success depends on how well it is developed, and if you follow it.  Blakeman on the other hand believes that you should "Implement now, perfect as you go" (Blakeman, 2014).

Personally, I think that both of these experts are right.  There is a need for preparation and research.  But, there is also something to be said about straying from the plan.  Sometimes we can make things better if we go off the books.  Use your knowledge and training to improve your company.  Yes, start with a plan.  We all have to start from somewhere.  But, constantly reevaluate it.  By providing continual feedback to the original plan, you just might create a business that is stronger than the one you had originally envisioned.

References:

Berry, T. (2005, September 12). What Investors Look for in a Plan. Retrieved October 29, 2016, from https://www.entrpreneur.com/article/79834.

Berry, T. (n.d.) Business Plan Expert Tim Berry. Retrieved October 29, 2016, from http://timberry.com/business-plan-expert/.

Blakeman, C. (2012, August 05). How: the worst, most asked planning question. Retrieved October 29, 2016, from http://chuckblakeman.com/2012/8/texts/how-the-worst-most-asked-planning-question.

Blakeman, C. (2014, October 28). One Learned Skill Contributes to Success More Than Any Other. Retrieved October 29, 2016, from http://www.inc.com/chuck-blakeman/new-gallup-research-one-learned-skill-contributes-to-success-more-than-any-other.html.

Chuck Blakeman | About. (n.d.). Retrieved October 29, 2016, from http://chuckblakeman.com/about.

Newlands, M. (2014, June 05). 5 Things Investors Want to Know Before Signing a Check. Retrieved October 29, 2016, http://www.entrpreneur.com/article/234536.