Wednesday, June 13, 2012

Craft a Business Plan That’ll Turn Investors’ Heads

Have you reached that all-important and often frightening moment when you realize that your business needs more money to get to the next level?

Whether you’re attempting to borrow a few thousand bucks from Mom and Dad or you want to ask total strangers to pony up several million, you’d better have your ducks in a row before you ask. In other words, you’d better have a business plan.

People have differing views about the import of business plans. I’ve even heard some venture capitalists say they’re not worth the paper they’re written on. Instead, they prefer just an executive summary. Nonetheless, being able to describe your business, the industry you operate in and the potential market for your company is downright vital. And you won’t generally address all of those aspects until you actually sit down and write up a plan.

Here’s a checklist of the minimum information you should have in the plan, along with some nice-to-haves that will increase your chances of getting a “yes” to that dollar request.
  • An executive summary: This enables potential investors to quickly determine whether it’s worth their while to read your entire plan. Therefore put as much effort as you can into making it a strong pitch to keep reading.
  • Company overview: The main purpose of your company, including products and services as well as any proprietary technology or other unique features. This is also a good place to include information on the company’s history so far.
  • Company mission and vision: This is the biggest picture for your company — the “why” behind what you do.
  • Investment rationale: Simply, how much you want and what you’re going to do with it.
  • Market and competition analysis: This covers the size of your market and who your competitors are for your product or service.
  • Marketing plan: This is the four Ps of marketing — product, price, place and promotion. Remember that you’ll want to prove that you know how to generate revenue for your business.
  • Organization: The structure and location of your organization are important measures of how well you’ve planned for future growth. This can be a simple organization chart with short explanations of roles, along with the address of your operation.
  • Management team: Your expertise and the skills and background of your team members can mean the difference between a yes or no on funding. Even if your experience is limited, talk about anything that makes you and your team — if there is one — uniquely suited to make your company a success.
  • Operations: How your organization runs. Consider using a flow chart.
  • Project execution: Do certain projects need to be completed before you can generate revenue? List them here with a plan for getting them done.
  • Risk analysis and mitigation: This is the section where you show that you are aware of the risks and have thought about how to deal with or eliminate them.
  • Financial plan: In this section, you’ll need to layout your funding structure, which tells investors where they fit in the equity of your company. You’ll also need to list your expected start-up costs, along with financial projections for the first five years. It’s helpful if you can offer a realistic estimate of when you will break even and start generating profits.
by Matthew Toren
Matthew Toren is an Award Winning Author, Serial Entrepreneur, and Investor. He Co-Founded YoungEntrepreneur.com along with his brother Adam. Matthew is co-author of the newly released book: Small Business, Big Vision: “Lessons on How to Dominate Your Market from Self-Made Entrepreneurs Who Did it Right” and also co-author of Kidpreneurs.

Friday, June 08, 2012

5 Myths About Being an Entrepreneur

If you’re looking for a feel good post about why you should quit your secure 9 to 5 job and become an entrepreneur, this is not the post for you. Being an entrepreneur is great and I wouldn’t trade it for a desk job, but there are some things aspiring (or existing) entrepreneurs should know.

#1 You’re going to be insanely successful. You are not the next Mark Zuckerberg. Sorry, you’re not and I’m not. If you have the idea that you’re going to sit down and create the next Facebook and be worth billions of dollars in seven to 10 years, it’s not going to happen. Am I saying it’s not good to dream big? No. I’m saying there is only one Facebook and only one Mark Zuckerberg in this world.

#2 Entrepreneurs have a very flexible work schedule. They can work three to four hours a day and have plenty of time to goof off. I know I’m not alone when I say that entrepreneurs don’t have the luxury of ending our workday abruptly at 5pm. When you own your own company or work for someone who does, you have to put in the extra hours and the extra effort to make things happen. If you aren’t ready to work some pretty long days, you probably aren’t cut out for being an entrepreneur.

#3 Entrepreneurs can take off when they want -- after all, you’re the boss, right? Remember all those times you used to be able to party on random nights of the week or just take off for a weekend with your friends? Not if you want to keep your business afloat the first year (or two, three, four, etc). Now I’m not saying you won’t ever get time off, but most entrepreneurs live, eat and breathe their businesses and a lot of times partying gets pushed to the wayside. What’s more important: Doing keg stands with college buddies or generating income so you can pay bills the next couple months?

#4 Working from home means you’ll have more time for your relationship, your pets, taking care of your home, etc. Wrong. Because you work from home, it’s like you live in this constant state of never finishing anything. You start cleaning the dishes and then think of a great idea or feature for your company. Instead of taking your significant other out to a nice meal, you ask to get drive thru so you can get back to work quicker. I can’t tell you how many times I’ve looked over at my dog and it looks like he’s crossing his legs because he needs to go outside (and I love my dog to death!).

#5 Everyone wants to have your job. I’m guessing it’s because people genuinely don’t love their jobs, but they think you have this perfect setup where you get to work and play all day long. I always hear things like “At least you don’t have to deal with a commute” or “I have so many worthless meetings and calls, you’re lucky”. Do you want to trade the last three days I worked 18 hours and had to go above and beyond to appease clients? No, no you don’t.

For all the starving entrepreneurs out there, keep fighting the good fight. We’re all doing things we love and enjoy, and that’s what matters. I may not be building the next Facebook, but I am excited about controlling my own destiny and knowing the harder I work, the more results I see.

This story originally appeared on Young Entrepreneur
By Jason Sadler