You’ve decided to become a successful entrepreneur and you think you’ve found the perfect vehicle for your first success … a new, revolutionary product.
You’ve spent months preparing and doing everything I’ve suggested in these columns … as well as absorbing the sage advice gleaned from other sources. You now believe you’re ready for “the big push in the real world” – actually trying to raise the money you need.
You’re at a whole new summit of your experiences. You gather all your paperwork, curl your toes over the edge of the precipice … and, you’re almost prepared to jump. But, wait a second … have you really thought of everything?
Clearly, the answer has to be “no”, since you’re new at this (and human) and can’t be expected to have thought of every tiny detail.
But, have you overlooked a “Biggie”?
I can tell you a secret. There’s at least one thing you’ve ignored … and, it’s the same thing that causes most new ventures “infant mortality”. It’s a small step and costs a couple of bucks, but it will buy you some insurance against premature failure while still in the crib.
No experienced investor has yet reviewed your Executive Summary or BP.
Maybe you have been cautious enough to have people review your documents for Basic English problems. Also, beside your team, two members of your family read through it and made comments (your younger sister thought it was “boring”) and you’re made corrections. However, no one with business management experience or a real professional investor has opened the pages.
Let’s assume you do the rational, prudent thing and hire someone with credentials to perform a review. You also should issue the following instructions: “I want you to ‘become’ an older, experienced investor that’s been through many cycles, up and down. You’ve been told of my new venture and I have piqued your interest. Now you have all my documents to read and to come to judgment as to whether you’d write a check. I want your brutally honest assessment, and, in writing.”
It so happens that you pick me, Dick Brown, (or someone with similar experience and background) for the assignment. Someone told you I sometimes take Clients and help them raise money, but that I first make them “jump through hoops” to prove their venture is well-conceived and viable, so I sounded perfect for you.
Many of the flaws that may exist in your plan are unique to the products and markets that are specific to the plan and will require my detailed reading and analysis of all sections. However, there are common holes in what most people would consider “professional” Executive Summaries and Business Plans. Here are just a few of the things I usually find.
First, I get a pleasant surprise that you’ve used a PowerPoint model in place of the traditional MS/Word format. This is becoming more popular and conforms to the design goal that “anything you can do to make the documents more friendly and entertaining, the more your reader will appreciate and absorb.”
However the ES is a tad long and by the time I reach the end, you’ve missed the mark. (First problem – an ES should be only one page and a maximum of two. If two pages, there must be a picture, graph or other artwork, in color. Your ES is 3 ½ pages.)
The purpose of any ES is to:
Catch the attention of the reader,
Whet the appetite to want more,
And, provide the first, compact answers to those questions of most interest to any investor:
What business are these people pursuing?
What “edge” do their products have?
What’s the background of each principal?
Other Generic BP Weaknesses
1. Early in the BP you state: “Our new product is so unique that there’s no competition. (I search Google. In 15 minutes I have found 12 different products that seem to do pretty much the same thing. Two of these are from large companies I know.)
2. Your marketing plan for product introduction and initial PR sounds realistic. However, it seems you’ll be selling your products through three very different channels. There’s no mention of any “channel strategy” to drive each channel to where it will succeed and also keep it out of pure price competition with the other two.
3. In your financing section you tell how much money you’ll need but neglect to say what ownership you’re willing to award for this … a serious, strategic flaw.
And on, and on ........ and on
By now, you should becoming aware that I take the consulting job you awarded me very seriously – as crucial as my role as your potential investor.
This is real business, played with real money and I have been given some responsibility to see that everyone involved comes out ahead. If you think the above is the end of the review I’ll do, you’re very wrong. It’s just the beginning!
… And, if you think I’m tough, that’s what you hired me to do. It’s a lot better to fix your ES and BP now than to send them out to real money sources and have them thrown away before you even get started!!
Business Is a Real War!
You Need Real Bullets (Money)!
Be Well Armed Before The Battle!
Finally, A Brief Commercial!
Dick’s consulting company is American World. His web site is www.amerwld.com.
AW also publishes his book: How to Raise Money, Insider Edition. Dick feels he put in “everything you’ll ever need to know to raise money”. It includes extensive tips on how to raise money, including the common pitfalls that await the unwary entrepreneur. It costs only $9.95 and is available as a downloaded file at www.amerwld.com.
If you have questions, comments or suggestions, send them along. (Click on the link at the end of this article, “Comment/Rate/Share” … or contact Dick at American World (email@example.com). You’ll get an answer.