WHAT DOES A "SMART INVESTOR" LOOK FOR IN YOUR BUSINESS PLAN?

     In case 2019 is your year for finally taking the leap and starting your own business, I wanted to give you a few Cliff Notes for creating the business plan and investor pitch book. You want to create the strongest plan possible for your own thorough due diligence, and you want to prepare the most enticing and informative pitch book to convey this amazing opportunity to others.
     If you are feeling insecure about your lack of experience or weak resume, throw those fears aside as creating a startup is the ultimate exercise which brings a clean slate and a world of opportunity to everyone who dares to dream.  Always know that the great business leaders you read about are also the product of some really lucky breaks (along with a hell of a lot of hard work), and most have numerous failures in their history, even some epic disasters.  Take it from a guy who knows!
     So, here are 13 points for you to consider this week when taking the plunge:

1.  As obvious as it may seem, please ensure the physical copy and digital copy of your plan are professional and beautiful.  I can't tell you how many times would-be-entrepreneurs pitched me with books full of typos, terrible grammar (even worser than mine!), and pages falling out.  Don't trip out of the starting gate.

2.  Table of Contents.  Again, this seems obvious, but it is very important since almost no investor reads the entire plan.  Different investors will flip to the sections they focus on and find most important.  Most only read one or two sections before they decide whether they have any interest.

3.  Executive Summary.  Ensure this is succinct and grabs the reader's attention just like the first chapter of a suspense novel.  Think "rule of first impressions," and do whatever you can to keep the reader reading.

4.  Business Description.  This is a high-level overview of the venture.  This section touches on who, what, why, how, goals, and expectations.  This is organized and modular for the investor to be able to focus on his areas of concern.

5.  Industry Background.  Educate the prospect on the industry's historical data, current status, size, features, trends, and  opportunities you can exploit.  Pull out your old SWOT analysis graphs.

6.  Competitive Analysis.  Who are your current and prospective rivals?  What are their strengths and weaknesses?  Why are you newer, faster, higher quality?  What is your niche?

7.  Market Analysis. Focus on the end consumer (person or business) and what they want or need.  Steve Jobs said people don't know what they need until you show them.  And did you ever know that you couldn't survive without an iPhone and  Google?

8.  Management Team.  This is the most important section for many sophisticated investors.  They believe strong business leaders can run a varied set of businesses, and that winners will win again.  You need to include detailed bios, and again, don't worry about past failures, because they also want to see lots of bruises and tough experience.  Show how the bios are relevant to the venture's success and how the synergistic team will compliment each other.  Also include plans to recruit, hire, and train the remainder of the company personnel.  Don't forget the relevant legal and contractual issues such as non-competes and non-disclosure agreements.

9.  Operations Plan.  Clearly explain how you are going to execute this service or produce this product.  Include workflows, processes, and critical paths.  Are we staying domestic or producing products overseas?  What equipment or real estate is necessary?

10. Marketing Plan.  Explain the high-level plans for print, online, and social media, and then highlight the central themes.  Always focus on benefits to the end consumer as opposed to the features of the product like most of your competition.

11. Sales Plan.  If applicable describe your experience in building sales teams and strategies.  Smart money knows that you might have the world's greatest widget, but if you don't have a brilliant sales process, you will always fail.  Conversely, many companies have mediocre products or services, but have a sales leader who can still knock it out of the park.

12.  Financial Plan.  If not your strength, get some help here to ensure you present proper financial statements and pro formas.  Provide two sets:  One for startup capital and launch, and another set for ongoing operations.  Include the balance sheet, income statement, and cash flow statement.  Invest in QuickBooks, and you will find this easier than previously thought.  Tip: The smart investors will cut your pro forma revenue numbers in half and then double your expenses.  Make sure the numbers still work.

13.  Compliance, Structure, Legal, Regulatory.  Without causing the investor's eyes to glaze over, cover the government oversight groups for this business, how it fits with the Labor Department (W-2/1099), and what is the liability.  Address patents, copyright, trademarks, and other relevant business details.

     Now once you have replaced the ink-jet cartridges in your house printer nine times, you are ready to rock the world with this new business plan!  Create an overview pitch book for your uncle who is actually just investing because you were the only one to listen to his stories after everyone else went to bed.  Then create a very detailed book for the NASA engineer prospect who loves to dissect your analysis.
     Have different elevator speeches and lunch presentation ready.  At lunch, simply cover the people, the opportunity, and the risks and rewards.  Once they are intrigued, you will go through the plan in detail.  Understand your audience at all times, and focus on chameleon communication.  If they don't understand, the answer is always no.
     Finally, include in the plan, and always explain to potential investors, how they are going to exit this opportunity.  After the 2008 Financial Crisis, investors must now first understand their liquidity.  They don't want to be stuck in an investment when the financial markets hit gridlock, and they don't feel as comfortable with indefinite time frames as they used to.  If it's a real estate enterprise, allow investors to exit after each property, or entity, is sold.  Allow them liquidity (swap and drop) while other investors may desire to roll gains tax-deferred into the next venture (1031 exchange).  Help them see the successful culmination of your dreams.
     Yes, this takes an incredible amount of work and vision, but our JAM Views members are up to the task.  How about 2019 is your year to make the leap?  What would you do if you knew you could not fail?

"We have been taught that negative equals realistic and positive equals unrealistic."  - Susan Jeffers

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