Industry Experts Share Advice on Business Plans!
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Jay Turo and Dave Lavinsky co-founded Growthink, the United State’s
largest strategic advisory and investment banking firm. Their successful financial consulting team has
provided critical secured funding for countless businesses and solo projects
initiated by self-starters.
Jay Turo is
Growthink’s CEO, specializing in entrepreneurship and private equity investing.
He is also a noted angel investor, and contributes a column about various financial subjects to Growthink. Dave Lavinsky is Growthink’s President, and known
for his work raising capital, business planning, and with new venture
development. He also started Growthink University, an institution that was
created to help entrepreneurs learn how to raise capital for their businesses
and projects.
Both men
believe that there are 10 KEY COMPONENTS that investors are looking for in a
business plan. These components are as follows, with a brief explanation as to
why each piece is important to the overall business plan/scheme:
1.)
Executive Summary- important because it brings the plan together and summarizes
the key points of the plan in two to four pages.
2.)
Company Analysis-important because it gives a general idea as to what the
company is about, how it is organized, what products/services are offered, and
what exactly the company’s unique qualifications are in serving it’s target
markets.
3.)
Industry Analysis- important because it breaks down the company’s industry and
assesses the market by examining the industry development, successes, failures,
and economics.
4.)
Customer Analysis- important because it evaluates those customers that the
business serves, and allows a business to identify its target demographic and their
needs.
5.)
Analysis of Competition-important because it identifies the businesses
competitors and assesses their strengths and weaknesses while highlighting what
makes the company better.
*****The first five components are VERY important because they
are usually the only things an investor will read. If an investor is not
impressed, they will usually stop reading after this point. If they are on the
fence, the next five components can
potentially secure the deal. *****
6.)
Marketing Plan- important because it explains how business will reach customers
and address promotion.
7.)
Operations/Design and Development Plans- important because it focuses on the
process for developing the product or executing the service.
8.)
Management Team- important because it states and qualifies the people
responsible for the successful execution of the work.
9.)
Financial Plan- important because it breaks down the company’s revenue,
assesses needed revenue, proposed use of funds, and expected future earnings.
10.) Appendix-
important because it includes material that supports the business plan, such as
financial projections, support letters, industry and competitors reviews,
client and customer lists, etc.
LAW Expert: Fred S. Steingold, Esq.
Mr. Fred S. Steingold is an attorney in Ann Arbor, Michigan, who is also an expert in
small business law. He has written several books on writing business plans,
finding the ideal business plan to purchase, and selling your business. He also
writes a monthly column called “The Legal Advisor,” available through national
trade publications.
While
Steingold believes all of the traditional business plan elements are indeed
important, the MOST important element is the financial forecast. He claims
that a business plan is like a blueprint, and if you leave too many things to
chance, or are not too careful when enter into your venture, you may overlook
critical factors and potentially doom your project from the start.
The financial
forecasts are even more important for any companies who are seeking start-up
capital from outside investors or any loans. Strong financial projections basically
tell an investor if your company is worth starting up or not, or if you should
re-think some of your foundational business concepts. Obviously, if you need outside
funding, then you need strong financial projections- because an investor will not
knowingly put money into something that will not give them a substantial return
on that investment. You would be hard pressed to find an investor who is
willing to take a chance on a "novel or solid idea" for a business without any
proof of a financial return.
Basically,
the KEY “key element” is the financial forecasts for Attorney Steingold. You
may not be able to see the exact future of your business. But if your predictions
are reasonable, feasible, well-calculated, and strong….you could indeed have a
winning plan!
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