financing Archives - Page 3 of 4

05/21/201206/28/2017

Preplanning the Business Plan

The Small Business Administration contracted with William B. Garner, a Spiro Professor of Entrepreneurial Leadership at Clemson University and Jianwen Liao, Associate Professor of Strategy and Entrepreneurship at the Illinois Institute of Technology to study pre-venture planning and entrepreneurs. Published February 2009 by the SBA Office of Advocacy, the article titled Are Planners Doers? Pre-Venture Planning and the Start-Up Behaviors of Entrepreneurs reports some interesting findings that all entrepreneurs should know.

First, the professors reported that, indeed, “…early formal planners are doers. We believe that challenging prospective entrepreneurs to accomplish a formal business plan early in the venture creation process will likely enable them to engage in additional start-up behavior that could further the process of business creation.” In other words, the business plan is informative and motivating.

The reasons given in the report for the importance of business planning include:

Entrepreneur can identify what he or she doesn’t know
Early identification of needed resources and when they will be needed
Identification of specific problem solving actions
Identification of actions needed to attain goals
Ability to communicate objectives, purposes and activities to others
Assessment of accuracy of business assumptions concerning resources, knowledge level, potential customers and beliefs
Reduction in organizational delays
Reduction in delays in acquiring plant and equipment, and goods and services
Keeps entrepreneurs on track
Provides benchmarks

In fact, studies show that even the presence of planning benefits entrepreneurial success. Presence refers to the whether a business plan is completed, while formality refers to a documented business plan. A written formal business plan was found to significantly influence a positive business start.

A lot is written about the benefits of writing a business plan in general terms. It’s good to know that studies of specific companies backs up the generalities. A business plan is a tool for success any way you look at it.

More detailed information and useful advice can be found at www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

05/18/201206/28/2017

Keeping the Business Plan Focused on Purpose

Business plans are used for many purposes, and that purpose can influence what is emphasized in the plan. Every business plan has sections that include the executive summary, business description, marketing plan, competitive analysis, development plan, management and operations plan, and financial statements and plan. It’s what goes into each section that must specifically address the purpose of the plan.

Business plans are as important for startup companies as they are for the large corporation ready to expand. Small and medium-sized companies, as well as the corporate giants develop business plans because they provide benchmarks for measuring progress. That’s one of the purposes then for developing a business plan – measuring actual results against strategic goals. Each section will establish periodic goals like number of marketing campaigns to run in a year, sales growth projections and net profit goals.

Another reason for preparing a business plan is to raise money. In that case, you will need to develop a well honed mission, clear objectives and goals and an executive summary that explains the type of business being started, the amount of capital needed and the type of financing. In addition, the marketing and financial plans need to be crafted so that they make sense in terms of the market and competition. This business plan will be used to get the attention of investors so you will want to show that the business will be able to make money or grow sufficiently to service the debt. If the investors will be equity partners, then the business plan will have to indicate how the company will be able to secure the investment and produce the desired rate of return.

A third reason business plans are developed is to attract people who aren’t investors. For example, a business plan can be used as a marketing tool when pursuing new customers representing large buyers. It is also used to attract suppliers or exceptional staff. The sections of the plan these people are most interested in needs to be fully developed. For example, large suppliers want to know you will have the right kind and volume of business and that plans for growth equates to supplier success also. Executive talent will read the business plan to discover information about corporate culture and the growth agenda.

In other words, a business plan is not just for attracting investors. It’s for all businesses at any stage of development and is used for multiple purposes.

Browse www.funded.com for more advice about getting your business funded.

05/16/201206/28/2017

Once Upon a Time: Telling a Story in the Business Plan

If you could start a business plan with “once upon a time”, what would follow? Once upon a time there was a business that offered a value proposition to customers. Or maybe you would write that once upon a time there was a business with a compelling story and investors couldn’t wait to read the details.

A business plan is a business document, but it’s also your chance to tell a story. That story is the tale of your business brand and what you offer in the way of products and services that create marketplace passion and excitement. Unfortunately, many business plans present the minimum amount of detailed information as required, but they lack enthusiasm. When the plan is presented to potential investors, you can bet they will notice this lack of excitement too.

Let’s face it – a business plan has to create a sense of fascination in the products and services. The story you have to tell should echo what customers are saying about the marketplace and their problems and how you will solve those problems. It’s a never ending story about what makes your business idea different and your products or services special. The story characters are the management team and the customers. The plot is all about turning authentic passion for products into a value proposition for consumers. What makes your story unique? Interesting? Fascinating? Remarkable?

A dry business plan that meets minimum requires but doesn’t share the entrepreneur’s motivation for starting or growing the business is doomed to enter the annals of boredom. That’s no way to get investors interested and especially innovative angel investors or venture capitalists looking for exciting new ideas. The story should not be invented or fictional. It must be authentic because it’s your story, your business and your products.

Once upon a time there was a successful business…

Browse www.funded.com for more advice about getting your business funded.

05/14/201206/28/2017

Getting Competitive in the Business Plan Competitive Analysis

Every business has competitors which is why the business plan includes a section that presents a thorough competitive analysis. The analysis considers businesses in the same industry your business will be operating in and evaluates similar products or services. It also looks at the features of the competitor businesses. The goal is to pinpoint the strengths and weaknesses of the competitors and then position your business in the industry and marketplace.

A common mistake new entrepreneurs make is telling themselves there is no competition. In the excitement of starting a business, they fall prey to the belief that their products or services are so unique there are no other options for consumers to choose among. One point to keep in mind at all times is every business has competition, and you need to know your competition well.

The competitive analysis in the business plan considers a number of factors for multiple businesses. It’s a good idea to analyze at least 5 businesses to ensure your research is thorough. The factors include product and services prices, the quality level and the product lines.

However, the competitive analysis also considers how your competitors market their products and services and the structure of customer services. The more information you know about a competitor’s organizational structure, sales team, type of facilities, management, and culture, the more effectively you can compete. The analysis should also be done from different perspectives based on market segmentation.

Often, the completed competitive analysis developed for a business plan uncovers opportunities for marketing, product and services differentiation, customer service or new distribution channels. So don’t look at the competitive analysis as a tedious research process. Instead, consider it time well spent learning how to succeed. Every business has competitors and should know who they are, what they’re doing and how they’re doing it. Then your business can do it differently.

05/07/201206/28/2017

Though the Looking Glass with Business Plan Financial Statements

Business plans have several sections and way at the end is the financial plan with the income statement, cash flow statement and balance sheet. Don’t let that lull you into a sense of complacency though because the placement of the financial statements is not reflective of the importance. The statements can be thought of as a mirror reflecting the written descriptions that came earlier in the business plan. That means the investor should not find too many surprises in the way of numbers that don’t support or match the marketing strategies, operational plan or competitive analysis.

In other words, the business plan financial statements shouldn’t remind anyone of Alice in Wonderland. She steps through a mirror and finds an alternate world that doesn’t make any sense. The alternate world is upside down, confusing and leaves Alice in a constant state of puzzlement. A funder reading your business plan financial statements shouldn’t wonder how you got from your marketing plan to the cash flow projections or how you made the leap from expansion plans to the liabilities on the balance sheet.

The financial statements need to present an accurate picture of the proposal. If it’s a startup, the projections should be reasonable. If it’s an ongoing business ready for expansion, the financial statements must be historically accurate and prepared according to Generally Accepted Accounting Principles (GAAP) and projections should once again support the business plan proposal.

You won’t find GAAP in the looking glass alternate world. In the alternate world, business plan preparers make up numbers not supported by the facts, overstate revenues and profits, understate liabilities and make cash flow projections that are clearly pie-in-the-sky. Potential funders recognize financial statements that are overstated, optimistic and unreasonable.

As you prepare the financial statements, just remember this: Don’t be Alice!

Browse www.funded.com for more advice about getting your business funded

04/13/201206/28/2017

Business Innovation Attracts Investors

Innovation is one of the many qualities investors look for when evaluating a potential investment opportunity. Angel investors, venture capitalists and even banks and other financial institutions are looking for new and creative ideas, problem solving approaches, business models and technology. An espresso machine for the car? Clean coal? Heat generated from fabric? “Green” bridge building material? New take on social media? All of these represent real and innovative products and services that attract investors.

Innovation represents a brand new way of managing something whether its products or services. Innovation adds an edge to competitive dynamics by spurring consumer demand and thus business growth. Investors look for the potential that a company can gain momentum as a startup entrepreneurship or as an existing business that is ready to use innovation for expansion.

Innovation in the marketplace is actually the foundation for commerce. Small businesses have generated approximately 64 percent of the net new jobs in the economy over the last 15 years. Small businesses also hire more than half of the employees working in the private sector. Entrepreneurship in all forms attracts a myriad of investors who are ready to fund the next innovation start ups or business expansions. That’s because innovation, by its very nature, finds untapped markets where consumer or business needs remain unmet. Innovation represents a goldmine of opportunity for the entrepreneur and the investor.

To attract the investors, you will need to put your ideas in a business plan. The plan will need to show how and why that untapped market exists and how and why the new idea can fill the gaps in these potential markets. For some entrepreneurs, the difficult part is not coming up with ideas. The difficult part is capturing the innovative spirit of the idea in a solid business plan. Fortunately, it’s easy to get professional assistance because some innovative ideas are simply too good to let them get away.

Browse http://www.funded.com for more advice about getting your business funded.

04/09/201206/28/2017

Funding for Innovative MWBEs Ready to Grow

It’s true that it remains a tight capital market so finding investors in the private traditional financial institutions and locating public grant and loan funding is still challenging. Even as banks ease up on credit availability they are tightening requirements for credit approval. On the public sector side of doing business, Congress is reining in spending and that means less government money available to flow into grants and low interest small business loans. Minority and Women Owned Business Enterprises (MWBEs) must find alternative sources of capital to fund their growing businesses.

It’s a fact that MWBEs have become a powerful engine for economic growth and jobs creation. According to the 2007 U.S. Census Bureau Survey of Business Owners, MWBEs now make up the fastest growing new business segment in the U.S. To continue growing requires funding to build capacity so that small to mid-sized businesses can bid on larger procurement contracts and projects.

There is no reason to miss out on opportunities for growth because of funding when there are many alternative funding sources. These sources include angel investors, venture capital and equity partner investors. MWBEs that have a proven track record of business success and are poised to take the business to the next level of growth should not wait for the economy to pick up steam. The growing determination by large corporations to increase supplier diversity spending means that MWBEs have unprecedented opportunities to bring their innovative and creative businesses to the marketplace in expanding roles.

There are investors and there are opportunities, and that is the perfect partnership.

Browse http://www.funded.com for more advice about getting your business funded.

04/06/201207/12/2023

Getting Down to the Details of Presenting a Business Plan

There’s plenty of information about writing business plans for investors, but what about the actual presentation? Like any job, there are details that must get attention or the big picture falls apart. During a business plan presentation, the audience is going to be considering the details of the presentation as well as the details of the plan itself.

Presentation details include things like the format, the length, the graphs and charts selected, the flow of the information presented, and the efficiency of the presentation itself. Giving investors a good impression of your organizational and presentational skills enhances the information in the business plan. Rambling or disorganized presentations can detract from the information being conveyed.

So what are these small details? The University of Texas at Dallas (UTD) business school recommends that the business plan presentation should only be approximately 30 minutes long. That may surprise some people, but we live in a society where people expect information to be conveyed quickly. Another recommendation is to keep the information on each page, slide or Powerpoint chart easy to read which means not putting too much information on it. A single page of presentation should have a maximum of 6 bullet points.

The flow of the presentation is important also. It should begin with a very brief overview of the company with a focus on why the services or products are problem solving and thus compelling. The overview is followed by a definition of the market need, the solution your products or services offer, the specific benefits conveyed to the market through your products or services and a description of the market and customers. You will also need to describe your competitive advantage. In a few presentation pages, the marketing plan and financial projections are presented.

A mistake many entrepreneurs make is developing a presentation that is too long and tedious. Investors are savvy and will ask the questions they need to know right then. However, investors and their accounting and legal advisors will study the written plan closely at a later date before making a decision. During the presentation, your goal is to get the interest of the investors to the point where they want to know more. It’s not to stuff as much information as possible into an hour.

More detailed information and useful advice can be found at https://www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

03/30/201203/07/2012

Traversing the Entrepreneur’s Valley of Death with a Business Plan

The business plan is a bridge that extends from initial startup to plans for long range success. That bridge crosses a wide canyon that includes seed money, angel investors and eventually venture capitalism and commercial funds. The first round of funding by angel investors is enough to get the business established and generating income through modest growth, but at some point for successful businesses the funding chasm becomes wide and deep. This Valley of Death, as the $2 million to $5 million is not so affectionately called, can kill young businesses if it’s not traversed with injections of new venture capital investment money. On the other side of the valley can be found business loans from traditional lenders meaning the company is now poised for unlimited growth.

There’s a lot of debate on whether this valley really exists. Many business analysts believe there is always money for market worthy companies that need cash. This is based on the assumption that inefficient companies or companies with products that don’t succeed in the marketplace will drop out of the running for funding. That leaves the companies with competitive products and services looking for funding. Angel investors play an important role in this process because they fund companies with the well designed business models and that are most likely to succeed over the long run based on their analysis. The poorly prepared business plan and angel investors act like culling tools and force bad ideas out of the funding process early in the process.

Crossing the Valley of Death will take a concerted effort to find multiple sources of funding in many cases. For example, young entrepreneurs can bridge the gap by vigorously blending venture capital with government tax credits. A fairly new concept is the ‘certified capital company’ in which a state issues tax credits to companies in return for making investments in young businesses ready to cross the Valley of Death. There are a number of new and creative funding concepts being introduced across the nation to stimulate job growth and economic development.

In other words, if you need angel funding or are facing the Valley of Death, rest assured that professionals familiar with the funding environment can steer you to funding arrangements you may not even be aware exist. If you see the Valley of Death looming, it only means you have been successful already.

03/28/201207/12/2023

Don’t Hype the Business Plan

A business plan is a living breathing document in that it can help you obtain capital through angel investors and then serve as the blueprint for goals and strategies. However, the business plan filled with hype is dead on arrival during fund raising because business plan readers will quickly recognize over-promising exuberance not based in reality. You may have an amazing idea and believe it’s a wide open market niche with no competition, but can you prove so?

Though angel investors are not financial institutions, they still rely on solid market and financial evidence for decision making. Using an abundance of words like ‘unprecedented’ and ‘one of a kind’ sends a signal that you have not done in-depth market research. Even if you have done the research, these kinds of hype words set a tone of naiveté and inexperience because very few products are unprecedented and lack competition.

As you write the business plan with the intent of submitting to angel investors, the words you need to be thinking should be more along the lines of ‘proven’, ‘accomplishments’ and ‘competition.’ If you say that your product is unprecedented then that word needs to be supported by third-party market research proving to the best of their ability that you have actually developed a radically new product. Even in that case, you also must still prove that an expanded market will want to buy your unprecedented product before angel investors will capitalize your startup. An unsold unprecedented product has no value.

Avoiding the hype in a business plan takes discipline because entrepreneurs are naturally excited about their initial stage of business growth. Hype makes your job of selling a business plan to angel investors much harder than it needs to be. Avoid the hype and the business plan begins on solid ground, and from there your fund raising chances can only go up.