Last week, I served as one of the judges for the Young Entrepreneurs Project (YEP) Business Plan Competition in San Diego at MiraCosta College.  Thank you, Joe Molina, for inviting me to participate with such a thoughtful peer group of judges, and congratulations to all of the high school and college participants for such a rich experience. …and thanks for the opportunity to enable ActSeed to continue supporting entrepreneurship within the community college environment and Small Business Develoment Centers like the North San Diego County SBDC.

Congratulations to the winners. First and second place in both high school and college received a cash prize to pursue their business goals. Third prize winners received a lifetime Entrepreneur Group membership to ActSeed to help them prepare their idea for the rigors of the marketplace.

While this contest showcased a small sliver of the population of entrepreneurs in the world, the opportunities these aspiring entrepreneurs were developing were diverse and creative. I’d like to share a few personal “takeaways” from my experience – thoughts that should be shared beyond the contest with all young entrepreneurs:

1. Make sure you can tell your story in one good visual slide. Just one. One contestant presented the perfect slide in his pitch, but didn’t include the same slide in his business plan. Ideally, the perfect visual is either the cover page or at least on the first page.
2. Make sure you can tell your story in numbers. Most young entrepreneurs likely don’t have a lot of background in applied business math. This isn’t trig or calculus, but simply being able to model your revenues and expenditures in a way that shows how and when you will make money – and how much money you’ll need to get to that point. Don’t just blindly fill in a template or formula that someone gives you. Rather, I’d recommend building your own rudimentary formula so you can really understand “what goes in, and what comes out (and when!)”. Don’t hesitate to get outside help to get this piece right.
3. Yes, you have competition. There is no such thing as a business with no competitors. Competition can be anything that makes someone in your target market decide not to open their wallet for your product or service. Make sure you are very clear how you will differentiate your product or service – in other words, uniquely why someone is buying or will buy from you rather than choose not to.
4. It will take longer than you think. Yes, some businesses make $100k in their first month of operation. Just don’t think it will be yours. Whatever you strongly believe about your revenue potential, delay it by 6-12 months (depending upon the type of business) and you’ll likely be closer to what will really happen. Remember that many companies are operational (i.e. fully open for business) for about 2 years before making meaningful revenues. There’s a strong correlation between surviving for two years and being successful, suggesting that you should expect the first two years to be an intense (but ultimately gratifying) struggle.

In summary, I’m grateful to be blessed with the insights that judging the YEP Business Plan Competition offered. I was encouraged by the potential I saw in what I believe are some of the future leaders of our economy.

Maintain focus and tenacity. Balance a healthy dose of dreaming with pragmatism. …and let us know if ActSeed can help you and your startup survive and thrive!

…………….

Reassessing and recommitting on a constant basis makes them both invaluable towards growth and improvement for us and our businesses.

ActSeed launched and learned in 2010.  We won’t forget what we learned and we won’t stop learning in 2011. 

Our commitment to entrepreneurs, investors, work-seekers and all others who contribute to building successful businesses remains the same:

• Provide valuable tools and resources to help you better prepare and avoid the pitfalls and potholes that lead to business failure, and
• Connect you to those who matter and can help you build your vision into a durable, competitive company

ActSeed’s wish for 2011 is that every entrepreneur reap what they sow, and that they carefully cultivate their business to ensure the greatest chance for success.

Here’s to a great coming year!

If you’ve never drafted a business plan (and need to), “Hit the Deck” is a great investment.

The title of Chapter 1 is “You Need a Business Plan. (Yes, This Means You)”. We absolutely agree, so we read further.

We’re glad we did.  Ronick really “cuts to the chase” about what a business plan of the 21st century should look like and why it’s important not only for pursuing investors, but even more for the entrepreneur to set a solid foundation to enter the marketplace and complete.

Lots of step-by-step guidance and examples.

If you’re new to investing, it’s a great book for you to read as well; here, you can learn what you should be understanding and what you should be seeing from the entrepreneur pitching you an idea.

The days of a business plan looking like a 48 page master’s thesis are gone. David shows you how to craft a solid plan quickly and with both internal and external impact.  Again, it’s a book you should add to your library, a quick read, and won’t set you back more than $15 or so. 

You can buy “Hit the Deck” by clicking here.

………………………………

In my previous article I provided an approach for creating integrated functional strategies and goals.  This article describes how to use these functional strategies and goals as the input to define operational metrics and create a financial plan.

Spreadsheet software makes it easy for anyone to spin up a financial model and “show” interesting results.  However, your credibility will be challenged unless you can communicate and defend your financial presentation and the  reasonableness of your model’s underlying assumptions.  I recommend that you follow the general approach outlined in the following graphic.

Assign one person with central coordinating responsibility.  It may seem obvious to have your senior finance person take the lead.  However, don’t hesitate getting someone from the outside involved if they have relevant experience, a general understanding of your business model, good spreadsheet modeling skills, and the ability to engage with your functional managers.  Make sure you start off with the proper expectations.  You may not need a full set of financial statements, or that need may be some time in the future.  Think a step at a time and focus first on operational metrics and a cash view of profit and loss.

Key Inputs:  Your coordinator should start with clear expectations for timeline and an understanding of the functional plans. 

Step One:  The coordinator should determine the time increments to be used for planning, for example monthly for 3 years or quarterly for two years, depending on the desired use for the final deliverables.  Then the coordinator should work from functional plans to construct a basic metrics interpretation of the cost drivers and assumptions for each cost driver by major category.  Major categories might include headcount by role, outside service or development costs, contract labor, equipment costs, raw material, purchase of partial or final assembled components, channel partner costs, IT infrastructure and services, commissions, training, etc.   At this point, the coordinator should focus on the operational activities that will drive costs included in Gross Margin.  In situations where functional plans describe alternatives, such as “build it ourselves” or “outsource”, these options should be included in the metrics model.  Organize your model horizontally to display Units (for example headcount by role), Unit Costs (for example the monthly base salary for each Unit), and if the cost is fixed (a one to one basis to Unit increases), variable (relative to a relationship to another Unit such as production), or step variable (relative to Unit breakpoints such as sales thresholds).  A simply conceived spreadsheet will allow you to efficiently engage each functional lead in the interpretation of their functional plan.   

Step Two:  The coordinator should meet with each functional manager responsible for the completed functional plans.  Given top management’s plan for sales and production, the coordinator should engage the functional manager in the build-out of the metrics model for their functional plan.  The discussion should focus on refining the list of cost drivers, estimating the units relative to the sales and production targets over the planning timeline, and expectations for direct costs (but not yet fringe benefit or other corporate overhead) for each cost driver.  The coordinator should challenge the functional manager so that the units and costs are reasonable given the sales and production targets.  Also the challenge whether the model is complete and captures all inputs and costs.  The functional manager needs to understand that this rough metrics model will become a basic budget for their operations and adjustments, and that this is not just an academic exercise.  Finally, the model should include referenced footnotes that describe basic assumptions that drive the metrics model.      

Step Three:  After completing the function-level metric model, the coordinator should create a consolidating spreadsheet tab that portrays a company-level view of the sales and production targets, units, and units costs on a cash basis for the specified time increments.  This spreadsheet tab should also include a quarterly or annual summation of units and costs.  As a second effort, the coordinator should create an additional corporate tab for costs such as management, space, utilities, employee acquisition or fringe benefit costs, insurance, and other overhead.  Some of these overhead items (for example employee fringe benefits) can then be allocated back to the functional models (for example as a percentage of direct labor).  If distinct functional options exist (for example “build it ourselves” or “outsource”) two or more consolidated tabs should be created and marked accordingly.  The summary model(s) and updated functional models will be easier for the coordinator to model the impact of changes in assumptions.

Step Four:  The next step is a review of the rough cut model with management.  This discussion should begin with a review of the functional metrics models, assumptions, and the summary model(s).  The key questions for management should be “Are we capturing all cost drivers?”, “Are our assumptions reasonable?”, and “Does this model accurately represent our business and expectations for operations and expenditures?”  Responses might lead to some refinements in how the model captures and consolidates metrics and costs.

Step Five:  After the model is determined to be workable, the next step is to seek management challenge for key assumptions and impacts on targets and costs.  This is essentially the real “what if” phase of refining the model.  A few examples of challenges here might include “What if we slow down our timeline for market introduction?”, “What if we use more contract labor?”, and “How can we reduce our pre-breakeven cash burn to the funding level we have or anticipate?”.  Each of these macro questions will have impacts on assumptions for each functional model.  This step enables management to refine or model alternatives and challenge the functional managers.

Step Six:  Next is a second round of discussions with functional managers to answer questions and focus on how the functional plans can be reasonably refined to meet the modeling objectives of management.  In other words, “Given management’s refined plans and constraints, what is the level of activity and costs that will allow you to achieve these targets?”.  Functional managers need to understand that this step in the process will require them to make commitments for reaching targets and operating within constraints.  In some situations this may result in push-back to management, indicating with supporting justification, that “This is the most efficient plan and use of all resources to achieve company-wide targets”.

Step Seven:  Input from functional managers should be incorporated into the functional and consolidated models.  Care should be taken to maintain version control over all models.  In my fifth and final article I will present some ideas for managing documents, collaboration, editing, and approvals.

Step Eight:  The new iteration of the model should be reviewed with management to demonstrate the impacts of changes and the commitment and input from functional managers.  This may be done in a meeting where functional managers present their refinements and assumptions.  There may be additional iterations, but the end product should be a dynamic model that can be used in budgeting, operational projection, and financial presentation.  Management needs to declare that one version of the model is “official” and that the underlying assumptions will be the standard for budgeting and projection.  And as plans change, this model will be the basis for modeling current and future state for these changes.

Develop Deliverables – Operational and Metrics:  The coordinator can now interpret the final model into performance targets, budgets, and metrics for each function and also for the company.  This deliverable can remain in spreadsheet format or be incorporated into a formal budget and financial management system.  Then each functional manager can be accountable for monthly and annual performance to plan.  And as circumstances change, these changes can readily reflected in the functional and company level models.       

Develop Deliverables – Financial Model:  The coordinator should work with the senior finance officer or outside resources to make the model adjustments required for the desired set of financial projection deliverables.  These adjustments might address cash to accrual basis for accounting, capitalization, depreciation, valuation of intellectual property, estimates of tax liability, or a myriad of other topics that do not directly impact the scope of influence for functional managers.  In many situations, an accurate projection of cash sources and cash uses may be adequate.  In the other extreme, a full set of independently reviewed financial projections (profit and loss, statement of changes in cash, sources and uses, and balance sheet) might be required.  Once again, it is critical that you begin this exercise with a clear definition of the final financial deliverables required.

This structured approach will deliver many benefits to your company.  Even if you do not need a full set of projected financial statements you will have developed a clear and shared company-wide view, commitment among management and functional managers, and mechanism for review and refinement.  Stakeholders outside of your company will appreciate and value this analytic interpretation of your company’s plans.

In my previous article I highlighted the importance of a structured planning process.  This article includes tips on the mechanics for creating strategy and setting goals by business function.  This exercise will create the level of detail and consensus required for effective operational and financial modeling.

Function planning has traditionally taken the form of bottoms-up activity-based modeling.  The premise was that a set of operational and financial goal were provided to a functional manager, the manager identified general resource requirements (people, equipment, infrastructure, capital, and technology) to meet the unit output and cost goals.  By setting the fixed and variable costs of each requirement, the manager could produce an operational model.  This model could then be tweaked to reflect revisions in goals and cost assumptions. 

 The traditional approach is still relevant, but the new options for technology and delivery chain procurement and management require a more dynamic and creative approach.  Recent history is full of examples where someone in an industry changed the paradigm by modifying their production, sales, or delivery chain.  Often turning on a dime.  Are the shorter business cycles and plethora of options a reason not to plan?  Quite on the contrary, it is a reason to plan creatively.

 Too often people get confused when thinking about the relationship between goals, objectives, and strategies.  I’d like to keep it simple by using an analogy.             

Get your leadership team into the mindset of developing a battle plan.  You’ve already begun by setting some primary direction for your company and products.  Your next step is to operationalize this direction by major company function.  This will allow you to make actionable plans that have associated activities, costs, and timelines.  The example provided in the graphic “Functional Goal Setting” first addresses the difference between goals, objectives, and strategies.  GOALS asks the question “where are we headed?”.  OBJECTIVES asks the question “how can we put some numbers to this?”.  STRATEGY asks the question “what do we need to do?”.   After addressing goals, objectives, and strategy, your team’s next challenge should be to consider alternate approaches to execute, monitor, and adjust.  LEVERAGE asks the question “how can we take advantage of internal strengths and external options to be better, faster, or cheaper?”.  RISK asks the question “what can we do to improve the likelihood of reaching our goals?”.   For each major functional goal you will likely have subsets of objectives, strategies, leverage options, and associated risks.  For example, you may choose to outsource a set of functions but you may at the same time be giving up some control over execution.  Ultimately the greatest benefit will come with your leadership group’s spirited debate on how they will work together to execute and fine tune, within their spheres of control, to achieve your corporate level imperatives.

 Using the battle plan analogy, think of the Army, Navy, Coast Guard, Marines, and Homeland Security executing a coordinated and responsive field campaign.  Each has resources and executable orders.  They may also be working with NATO forces (your channel and supply-execution chain partners).  Don’t hesitate getting your team leads into discussions with these third parties (assuming you have a reasonable level of trust and non-disclosure in place).  They may provide you with options or examples that your own group may not have considered.  Also, their ability to coordinate and work with you will be enhanced if they understand your execution model.  Each party need to go into battle expecting that their best, most detailed plans will be refined and adjusted.  But their shared understanding of the end game and functional game plans can only make these changes more efficient.  How many business school case studies have been based on a company with a great product idea and no ability to execute?  Was it because they weren’t smart enough or didn’t understand their market?  Sometimes, but not often.  Typically the problems compound from day one due to the lack of a coordinated execution plan.  What do investors look for now more than ever?  Ideas and talent, as well as a thought-through, creative, and achievable execution plan.  Now I’ll get off my soap box.           

 Finally, don’t provide some vague instructions to your team and expect them to come back with high quality functional plans.  Spend some time and provide them with a format of the topics you’d like them to address, a common deliverables format, and some examples for discussion.  It may also be helpful to provide some basic and general assumptions – such as the rate to be used for labor overhead or the costs for contracted personnel or services.  Don’t prematurely ask your team to develop a detailed financial model.  Have them focus on outcomes, activities, cost drivers, and alternatives. 

 In the graphic I’ve provided a few simple examples.  Make sure your functional leads have a clear understanding of the deliverable.  Assure them that you want them to be creative, but at the same time not waste time on esoteric analysis.  Your team will likely find this exercise to be a bit tedious at first, but will find it much easier and efficient if they work through an example and finally “get in the groove” to start populating the deliverable.  This exercise is also a great way to gauge the facilitation and analytic skills of your team members.  Functional planning and coordination can be an important component of your performance management process.

 In my next article I’ll provide some perspective on translating your planning deliverables into refined financial and metrics models.

 In my previous article I highlighted the importance of understanding the needs and interests of your audience targets.  The next step is putting a process in place to develop and iterate your plan, including assessment of your business and operating environment.

Efficiency and integration of ideas should be your major goals in developing a business plan.  Each of your key team members, including yourself, have other responsibilities, so a clear set of deliverables, activities, and timeline will minimize distractions and delays.  There are three primary areas of focus as you organize the process and assess your environment: 

1. The first is definition of the product/service concept, target market, and related technical development. 
2. The second is the specification of an execution and delivery model. 
3. The third is the iteration and integration of functional execution plans for translation into a financial model.

Make an honest assessment of your staff and those directly involved in your enterprise.  Very few early stage companies can claim (or afford) to have strong representation across all aspects of their venture.  Yet, strong functional representation and relevant experience (particularly venture and emerging company experience) is critical in developing a solid, integrated plan.  For this reason, you should begin early to create and manage an informal, yet involved “Advisory Board”.  You can think of it as a “Delphi” group providing input and perhaps even completing deliverables for your plan.  Members can also provide “eyes and ears” on potential competitors and partners, and also facilitate introductions to partners, vendors, and investors.  Members may later serve in a more formal capacity on a Board of Directors.  A workable number of advisors is typically three to seven people, ideally representing expertise in the spectrum of your market, product,/service, funding sources, and execution model.  Advisors are often given a nominal stock position or options, depending on the level of their involvement.  The purpose of this group is to provide coverage where you need it, alternatives, and also honest, objective feedback on the viability of product/service and execution model.

The following two graphics together describe an iterative process for business planning.

The purpose of the Initial Definitional and Planning stage is to develop a rough-cut, but integrated outline of your key business dimensions.  In this example, I’ve grouped them into Product/Service/Market, Execution, and Administration.  No effective plan can be static, so I recommend three planning horizons, including Development, Introduction, and Expansion.  You can call them anything you want, as long as you express them as assumed timelines for developing your product/service, initially introducing it to the market, and then expanding your operations.  The key questions posed for each dimension are fundamental. 

In the Development horizon key questions include:  What is the product/service concept, requirements to develop, and target markets?  What market will we bring this to, and how will we sell it?  What basic business and compliance functions do we need, and what are the implications for staffing or professional services?

In the Introduction horizon key questions include:  Are there opportunities to phase the development and introduction of the product/service, both\for financial and time to market reasons?  How we organize and operate distribution and provide the required forms of support, including technical and customer service?  How will we obtain the human resources and infrastructure required to support product/service introduction?

Finally, in the Expansion horizon, key questions include:  Which enhancements or extensions of the product/service will allow us to capitalize on the market and financial opportunity?  How will we expand our market and channel operations to efficiently meet sales and operational goals?  What insight and infrastructure do we need to efficiently manage our enterprise?

You may not have direct team coverage for each of the Planning Leads identified in the graphic.  This is where your Advisory Board can be valuable.  Get their involvement to cover the identified disciplines where you lack coverage or strength.  Your Initial Definition and Planning Iteration should generate an outline view of your business model and plan, identify major issues and risks, key assumptions, and general enterprise requirements as you move through the planning horizons.  The rough-cut initial iteration should provide enough detail to support a subsequent, function-based planning iteration.

The purpose of the Subsequent, Integrated Planning Iterations is to develop more detail in functional sub-plans and integrate these sub-plans with regard to the operational intelligence you’ll need to operate efficiently and effectively.  The graphic shows a typical set of linear operational functions – yours may be somewhat different.  Think of this as breaking your Initial and Definition and Planning function and team into sub-groups focused on relatively discreet functional components.  Using the rough-cut plan as a starting point, these sub-teams should be tasked with developing the next level of plan details.  Avoid having your sub-teams write any lengthy narrative about this next level.  Instead, their efforts will be more efficient and consistent if you provide them with an outline of objectives, topics, and a simplified, consistent reporting format.  Planning Leads should obviously represent your grouping of operational functions.

Sub-teams can begin a new planning cycle by developing the next level of detail for their function.  After assigned tasks are completed, the next step is to integrate the sub-team deliverables across functions.  In the graphic I show this as a non-linear Operational Intelligence process, focused on level-setting the plans and identifying the information needed to operate as an integrated enterprise.  A good approach to integration is a structured, facilitated session represented by each of the Planning Leads.  The session should be lead by a good facilitator who can provide structure on the objectives, structure, and deliverables for the facilitated session.  Without this structure your session may go off on tangents or levels of detail that will keep you from achieving closure of the planning cycle.  There are many ways to organize the session; however, one of the best is to have each Planning Lead present their sub-group deliverables while the other Planning Leads make notes on assumptions, issues, and dependencies.  Then, in a second round of discussion each of the Planning Leads can field questions from each of the other Planning Leads to refine and level-set assumptions and dependencies of each sub-team deliverable.  In a third round, the discussion should address the information and systems needed to operate the integrated enterprise.  A successful integration session should generate the target level of planning detail.  If not, a second cycle may be scheduled to drive to the next level.  It is the responsibility of the top management team to specify the planning horizon, level of target detail, and timeline for each planning cycle. 

The structured, disciplined approach I’ve described may sound a bit onerous, but it can be scaled to any situation.  The benefits you’ll derive from structure and discipline include better and more actionable results, a faster timeline, and a shared level of understanding and buy-in.           

More details on functional-level strategy, goals, and the role of the financial model will be included in my next article.

 In 1993 I co-wrote a book (with Grant Thornton colleagues) titled “How To Prepare A Results-Driven Business Plan”.  At Grant Thornton we observed that most clients seeking bank or investment funding took either a cookie cutter or overly academic approach to preparing their business plans and supporting documents.  These business plans typically took a great deal of time to prepare, yet seldom “closed the deal” when presented for financing.  In many cases, the “worst” business plans were prepared by a third party.  The objective behind our book was to provide models and a leading practice approach that closely integrated business concepts and strategy to defendable finance and operating details – hence the “results-driven” premise.

So, with more than 15 years of water over the dam have the fundamentals of ‘results-driven” business planning changed?  What can you do to fine-tune your business plan in order to obtain funding and support in today’s world?

I’d like to work from the basic premise of the Grant Thornton book and provide some new perspective based on my experiences as a consultant and entrepreneur.  My focus will primarily be  on business plan components used for funding or external support.  I also assume that you have developed a basic business concept and strategy.  For a broader primer on business planning I’d suggest that you take a look at some of the primer resources in the ActSeed Marketplace.

The topics I’ll cover include:

1. Understanding Your Audience
2. Organizing the Process and Assessing Your Environment
3. Strategy and Goal Setting by Function
4. The Financial Plan
5. Assembling and Refining the Components

The first topic is addressed in this article.  The others will be addressed in weekly articles at ActSeed.com.  

 1. Understanding Your Audience

 The business planning process should begin with the identification of your audience and the evaluation of their interests.  By translating their interests into a set of business plan “deliverables” you can efficiently organize the efforts your team efforts in translating your strategy into goal setting and planning.  First you need to identify your audience segments and determine your objectives for meeting and presenting your business concept.  Second, you need to define the information and level of detail they need.  Then you need to use that information to develop a work plan and timeline to develop specific deliverable “components” according to your priorities.  Through interaction with your team (as I will describe in a later article) you can bring together and integrate the components.  Having interim, or in some cases draft, materials is valuable for early stage meetings and web content.      

Most of us would like to think that our great business idea could be grasped by anyone with modest intelligence.  After all, we’ve developed it to the point that we are convinced it is airtight.  What many underestimate is the fact that securing money, talent, organization, and outside support requires an overt and sustained communication to key constituent groups.  The interests of these groups can vary widely, so it is apparent that no one document or level of detail is appropriate to meet all needs:

The primary interests of the internal audience – management, employees, advisors 

• Integrated and actionable operational details
• Financial planning and forecasting
• Performance management

Primary interests of external audience – investors, vendors, and acquirers  

• Viability of product or service in the market
• Achievability of goals
• Organizational capacity and discipline to execute
• Mitigation of risk

While the needs of these two groups might appear reasonably distinct, the growing integration of discontinuous supply and distribution channels has created a hybrid party – the business or channel partner that acts as an operational extension of your company as well as an investor.  This hybrid might help you quickly access new markets or distribution channels, reduce operational costs, and fund the costs of expansion or systems development.

Primary interests of channel hybrid audience – supplier/distributor/funding source

• Operational synergy and cost avoidance
• Elimination of channel redundancy
• Deeper, more real-time market “insight” and increased sell-through

Add to this the opportunities to out-source, off-source pieces of operations, or have third parties host or integrate information systems and data.  Clearly, today’s operational environment can be much more enabling, but also much more complex and integrated.  But, a non-linear business model and supporting plan can be powerful if explained properly.

I suggest preparing a simple matrix with the horizontal axis representing the stakeholders or “audiences” for your business plan, and the vertical access representing the functional topics to be addressed.  After preparing this straw model, get your team and/or advisors involved in a discussion regarding the level of detail required for each stakeholder.  Individual team members will be responsible to prepare drafts for their functional area of responsibility, so a clear definition on the level of detail, timelines to complete, and the process to integrate components is an important step.  Also you’ll want to achieve agreement on the format and method for collecting and keeping version control over draft documents.  The use of software collaboration tools (to be addressed in the next article) can be incredibly valuable, particularly if team members do not reside in one physical location.  After agreement on formats and responsibilities, the next stage of your discussion should address the level of detail required for each stakeholder.

 The following graphic depicts a simplified and iterative approach to developing and refining a set of business plan components.  Stakeholders and key business functions are identified.  A sequence for completion is defined, and the level of detail appropriate to the stakeholder is specified.  The logical sequence for completing and integrating each component into the overall deliverable for each stakeholder should be clear.

Audience Focused Planning

Perhaps the most important thing to consider is that each of the functional components will go through many changes and levels of detail as they are prepared.  There is no such thing as a static business plan, but if you are able to work from solid draft deliverables it will be much easier to make and integrate comprehensive changes.  When changes, such as the opportunity to work with a new channel partner, unfold it is best to re-assemble your team and have a discussion on the implications of the change to each of the business plan components.

 It is easy enough a few copies of business proposal formats used by investors.  However, your business plan will be much stronger and focused if you borrow some of the concepts of Customer Experience Management – beginning with the needs of your customer or stakeholder, then working backwards to efficiently produce the component deliverables that will address their interests and needs.  This will help you avoid time spend on non-relevant topics and allow you to prepare “just in time” content.  It will also enable you to tell a compelling story about your planning process.

More ideas on the planning process and assessment of your environment will be included in my next article.

In this vein, I’ve benefited from developing some of my own structured thinking around the pinnacle of startup / new business creation questions: “Are you prepared?”  I realized that before you can answer “yes” or “no” to this question, there are secondary questions and even a layer of tertiary questions that need to be considered.

1. Team Formation: “Is your team in place?”
2. Product & Services: “Do you know what you’re selling?”
3. Customer & Market: “Do you know your customers?”
4. Competitive Environment: “Do you know your competition?”
5. Risks & Challenges: “What are your greatest risks, vulnerabilities and challenges?”
6. Planning & Preparation: “What formal strategic planning have you completed?”
7. Critical Needs: “What do you need to survive and succeed?”

This isn’t just for a business plan.  It’s for business planning.  It’s not just about a written document called a business plan that is usually created to raise money; it’s about thinking and acting on these issues every day.  Why?  Because every day, these issues are evolving outside of your ability to completely control them.  If we ignore these preparatory issues even for a small period of time, we are unnecessarily vulnerable. 

A widely researched and discussed topic is the connection between entrepreneurs and risk.  We’ll weigh in frequently as well.  Fundamentally, I believe entrpreneurs don’t just have a greater appetite for risk over non-entrepreneurs; I believe entrepreneurs have a greater ability to manage risk.  How we manage business risk better than others is largely due to how well we incorporate a preparatory mantra into our management and leadership processes.

For our inaugural post here, we’re just scratching the surface on a number of topics that merit lots more writing from all of us, and I hope you’ll contribute along with me.