November 24, 2010 by Frank Goley, Business Consultant
The Executive Summary is often touted as the single most important part of a Business Plan. If the business plan is to be used for external uses, such as a Funding Business Plan or Joint Venture Business Plan, then, yes, the executive summary is of pivotal importance. The executive summary must be concise (no more than 3 pages) and encompass the most important parts of the business plan for the particular audience/reader. In many instances, particularly if you are going after Venture Capital or Angel Investment, the executive summary can only be one page. It is a huge challenge to get the most salient points of the funding business plan on one page, and a challenge I just recently met as a Business Consultant with our Executive Summary Service for a client competing for angel investor seed finance.
Organize the Executive Summary Layout in Two Columns
I suggest using Power Point and lay out a one page slide with a 1/4 page column with a border on the left side of the page, and next to it, a 3/4 page column that has boxes with borders of various sizes (per the amount of information needed in each box). Please see the attached One Page Executive Summary Example (PDF) format and layout. By dividing the page into two columns, you can fit a lot of key information into one page. The suggested format should be customized per your company, purpose, funding and target.
Customize the Executive Summary for the Reader
If the reader of the executive summary is a specific venture capital firm or angel investment network the odds are they will have a preferred format and structure for the one page executive summary. So be sure to customize each executive summary for each particular funding group you target, or whoever the intended target of the executive summary is (such as a joint venture partner or strategic alliance target).
Create as a Power Point
By creating the one page executive summary as a Power Point document, you can easily embed a video to demonstrate your product or service. Video brings an executive summary to life and gives the reader a real look into how your product or service works. Be sure to keep the video short (no more than 30 seconds) and small in size so the document doesn’t become a huge file. Note: This assumes you are emailing the Power Point or presenting the opportunity via a computer presentation.
Getting Interest is the Number One Goal
You can’t completely prove out your business model in a one pager so don’t try. The executive summary should entice the reader to ask for more information or meet with you. The Business Plan is the next step and will show how you as a company can realistically achieve the goals and numbers set out in the summary.
The Team is Most Important
Any experienced venture capitalist will tell you that the company team is much more important than the product. You can have the best product in the world with a crappy team and fail. You can have a fantastic team with a crappy product and succeed. Winning company teams find business models that will work despite the product or service offering. Be sure the executive summary shows the clear advantage the company has with the team that is in place and members to come on board as the company grows.
The One Page Executive Summary Works
The before mentioned client (see paragraph one) came to me because they were trying to win a contest for initial angel investor seed funds to get their company positioned for later round Venture Capital. They had tried 6 months ago to compete against 2,000 companies and didn’t get close to the final round. This time they contracted me for our Executive Summary Service, and due to the one page executive summary, they have made it to the final 12 companies out of 1,600, increasing their chances of getting angel investor funds 1,000%. They attribute the one page executive summary to getting them this far, now the product and team presentation will determine if they get the funds. Either way, funds or no funds, they have the visibility in the angel community they desperately needed to get funding for their company. A simple document brought them this opportunity and timely visibility.
Remember: The Executive Summary is just the first step. You need to have a Business Plan to back it up. Have your ducks in a row! You may want to consider our Business Plan Service for your business planning needs, whether for funding, business success, or another business plan purpose. All of our business plans are customized to our customers needs and contain an executive summary. We offer Four Levels of Business Plans to meet most purposes and budgets…
Posted in Business Planning.
November 12, 2010 by Frank Goley, Business Consultant
One question: Do you have what it takes to see a business plan process through?
I am always surprised as a Business Plan Consultant how a business planning process brings a company to its knees. Admittedly business planning is difficult, but it certainly isn’t impossible. I just find that business owners and entrepreneurs don’t like to do it and want to skip ahead of it. By skipping ahead, they are taking a huge risk, inestimably saying, “I will guess how to be successful with my business.” Do you want to guess with your hard earned dollars and risk the livelihoods of those who come everyday to work for you? Of course not…
To Develop a Good Business Plan Takes 75 – 150 Hours
And sometimes business plans require 200-300 hours of work. It really depends on the circumstance and size of the company, scope of the market and how comprehensive the business plan needs to be. If you are working with a Business Consultant on the plan, plan on dividing that time between you. No matter how good and experienced the business consultant, good business planning takes a lot of involvement from the business owner and team members.
Work on the Plan a Little Bit Everyday and Make it a Priority
Business owners and team members are busy. I get it. You have a business to run. Set aside 2 hours per day for your business planning. That’s it. Doing a little work on it everyday is better than trying to work 5-10 hours on it at one time. Business Planning is a marathon, not a race. Doing a little bit every day of the week will quickly add up and real progress will be. Moreover, you won’t get burned out and your thought process behind the business planning process will remain sharp and fresh. I recommend doing your business planning first thing in the morning before your busy day starts. Make it a priority, and it will get done in a timely, efficient and effective manner.
A Business Plan Process Builds Momentum
If you look at the totality of a business plan, it becomes very daunting. But if the business planning process breaks it down into little steps and in a building block architecture, then the Business Planning gains momentum over time, becoming easier and much more enjoyable as you progress. Business planning can be enjoyable if you get that momentum and see the result of discovering things about your business, market and competition that you didn’t know prior.
When the Business Plan Document is Done, You are Just Getting Started
What use is a Business Plan if you don’t implement it? Otherwise, it is just a document collecting dust. A business plan is a roadmap to success and should have step by step implementation as part of the Strategic Plan roll out. A business plan is really never done. It is a continuous tool, process and system to use to sustain competitive edge, to quickly spot market trends, to anticipate problems, and to uncover hidden opportunities. A business plan is a living, breathing, dynamic tool to use on a daily, monthly, quarterly and yearly basis to guide a business through the minefields to come.
ABC Business Consulting offers 4 levels of business plans to meet most business planning needs, goals, budgets and objectives.
Posted in Business Planning.
November 5, 2010 by Frank Goley, Business Consultant
In my Previous Blog Post, I discussed two of the fundamental reasons why a company’s Funding Business Plan Fails to Help Obtain Funding. These two often missed business planning fundamentals are: Inadequate Business Plan Process and The Business Plan Didn’t Adequately Prove How the Business will Succeed.In this blog post, I continue with 10 more top reasons why Funding Business Plans fail to help a company obtain funding.
#1 – Experience Level of the Company Principals is Lacking
This is a biggie. If you don’t have the right mix of experience on the founding team and management, then finding funding will be extremely difficult. In your Business Planning, identify your management gaps and determine ways to fill them and overcome them.
#2 – Lack of a Business Track Record
This goes along with #1. To obtain Business Finance, whether from a bank or investor/venture capital, the business plan clearly needs to show previous successful and unsuccessful business track records. Unsuccessful business experiences are good since they show how an entrepreneur has learned and adapted, as long as, the non-successes don’t overshadow the successes. At the end of the day, the company principals need to show successful track records. They did it once, they can probably do it again is the thinking.
#3 – Unrealistic Financial Projections
As a Business Consultant I see this all the time in Business Plans. If the Business Planning Process builds a well researched and reasoned Marketing Plan and Strategic Plan, then more times than not, the Business Financials will be based on good assumptions and reflect real market realism. However, many companies in their business planning short the marketing and strategic planning processes, which produce wild guesses in forming the financial projections.
#4 – Lack of Existing Cash Flow
Bankers and investors alike want to see a company that is bringing in some cash flow. This makes the business plan objectives and projections a lot more believable and the funding request a lot more palatable. Signed contracts also indicate future cash flow if funding comes through- this is a great hot button for funders.
#5 – Lack of Company Principals Cash Contributions
If you can’t / won’t commit personal funds to your venture, why should anyone commit theirs? Need I say more? 10-20% principal cash contribution makes for a strong funding request.
#6 – Inadequate and Poor Quality Collateral
You probably can’t finance all of your business plan with just cash investment. Good collateral goes a long way toward opening up your funding options and possibilities. Offer clean collateral that is fundable. Good real estate with cash flow is great, good assets, equipment and so forth. Cross collateralizing can be an option and often pulls in the security a funder is looking for to make the leap to fund a company. Collateral that is highly leveraged with liens or poor quality collateral just makes your funding request look sub-par.
#7 – Bad Executive Summary
The Executive Summary makes the first impression. A poor summary will get your funding business plan quashed in 30 seconds. Give your plan a chance with a well developed and presented executive summary.
#8 – Poor Ancillary Documents
A Business Plan alone isn’t sufficient for funding. You also need a good Loan Package and Investor Overview. Get your documents and packages done prior to starting your funding search so you can be jimmy on the spot with the funder’s request for more information. Good due diligence goes a long way to successful business funding!
#9 – Messy Business Plan
A messy plan means a messy business. Funders don’t fund unprepared companies and companies that don’t care about their work. The business plan needs to be neat, clear, easy to read and scan, legible, and presented using good writing and grammar. While every plan needs substance, it is the polishing of the plan that gives the substance that added edge. An edge that can and will get you funded.
#10 – No Substance Behind the Flashy Colors, Tables and Charts
As a Business Plan Consultant I see these “good looking”, flashy business plans all the time. But upon closer inspection, I find them hollow and lacking any real substance. It is the substance that gets you funded, not the flash, not all the color graphs and charts and photos. It is good to have some of this pizzazz, but the substance and reasoning in the plan is what makes it believable. Many business plans are produced using templates, samples, and cookie cutter content. These types of plans are thrown in the garbage can in 30 seconds or less by a funder. Meld your substance with some flash for best results.
Need help on your Business Plan? We offer Business Plan Reviews…
Posted in Business Planning.
November 1, 2010 by Frank Goley, Business Consultant
Business Plans don’t guarantee funding. It is the foundation and fundamentals behind a Business Plan that give the plan and company the best chance to obtain funding. The distinction is important. No matter how colorful, flashy, professional looking and apparently well written a business plan is, there are business fundamentals which need to be proven out in the plan to make the funding request viable. We see so many business plans on the market that look great from an aesthetic standpoint and appear to have all the necessary ingredients, but upon closer inspection are just canned, cookie cutter plans that prove little as to specifically why a particular company is a good investment or lending risk. A sample business plan that got one company funding won’t get another company funding unless that company has the right business fundamentals in place. Let’s look at the top two business fundamentals often missing in a business plan that fails to help a company obtain funding.
Inadequate Business Plan Process
The quality and depth of the Business Planning Process is more important than the business plan itself. If the process is lacking, then the produced business plan will be significantly lacking. The planning process needs to be customized for the particular business. Our Business Planning Customers often remark that the process behind the business plan development was extremely beneficial, even more so than the finished plan itself. A good business planning process uncovers problems and addresses them prior to sending the plan to a funder, maximizing the reception to the plan and the results of the plan.
Tip: Please see my Business Plan Book for a proven business planning process that can be applied and customized to all types of companies, no matter the stage, size or funding level.
The Business Plan Didn’t Adequately Prove How the Business will Succeed
This is a huge point. As Business Plan Consultants, we see many funding business plans being developed in the marketplace which are shallow, hollow plans that do little to adequately and realistically prove to the funder that the business is capable of being successful, servicing the debt level requested, and being a good investment risk. The underlying principle behind any business plan, no matter its purpose, is to prove out and show how the company will run successful business operations. Due to the success of the operations and marketing of the company, a case can be made for funding. A Funding Business Plan is really just correct formatting and having the information a funder is looking for. It is the fundamentals behind the plan that prove a best chance for business success that helps to position the company for a successful finance campaign. If a plan is lacking these fundamentals, it will never have a chance at obtaining funding.
My next blog post will explore some more of these business fundamentals and other reasons why a business plan fails to help a company to obtain funding.
Posted in Business Finance, Business Planning.