Friday, March 18, 2011

BP Development Expert Views

Expert Views on the Value of Business Plans
As an assignment in the Business Plan Development class within the Masters of Entertainment Business program at Full Sail University, we ask our students to select two experts in the field of developing and evaluating Business Plans; and document their positions on the creation and use of a Business Plan.
Michael Koch and Steve Burhoe are the course directors and between them they have over 60 years experience in business, business analysis, and the development of business plans.  Mike’s background is in finance with a variety of companies including AT&T; and Steve’s is as an independent consultant who has developed over 75 business plans for startup companies in the US and abroad.
This blog site is a selection of experts identified by our students and their backgrounds and positions on the importance and use of Business Plans for new or existing companies.  The positions range from high importance to no importance, but their reasons for their positions are important to the budding entrepreneur.
We will be adding to the site as new experts and positions emerge from the business community and their opinions make us go ‘hummmm that’s an interesting way to think about business plans’.
According to (n.d.), a business plan is defined as “a detailed plan setting out the objectives of a business, the strategy and tactics planned to achieve them, and the expected profits, usually over a period of three to ten years.” Also, the term plan is defined as “a scheme or method of acting, doing, proceeding, making, etc., developed in advance (, n.d.).”  It is important to understand the definition of these concepts, as it will help to shape your objectives as it relates to researching and preparing your business plan.

Jay Turo and Dave Lavinsky are Co-founders of Growthink, the country's largest strategic advisory and investment banking firm. Together they have formed a team of expert financial consultants who have successfully secured funding for countless businesses and entrepreneurs.
As co-founder and CEO, Jay Turo has spent the last 10 years advising and managing business clients. He has worked with all types of companies from new emerging small businesses to multi-million dollar corporations. Turo specializes in private equity investing and entrepreneurship. His speeches, interviews and writings have served the needs of many emerging entrepreneurs.  Interestingly, Turo is also a noted and respected angel investor.
Dave Lavinsky, Growthink’s Co-founder and President, is internationally known for his work with business planning, capital raising, and new venture development. He too has done numerous speaking engagements, articles, interviews and, as of late, a blog on entrepreneurship, business planning and funding. Lavinsky is also responsible for Growthink University, an institution created to assist entrepreneurs and business owners through the process of raising capital for their businesses.
According to both Turo and Lavinsky, there are ten key components that investors are looking for in a business plan: Executive Summary, Company Analysis, Industry Analysis, Customer Analysis, Analysis of Competition, Marketing Plan, Operations/Design and Development Plans, Management Team and the Financial Plan. Understanding and applying information to satisfy these components can make the difference between whether or not a business will be funded.
The Executive Summary brings the entire plan together. It is a 2 to 4 page synopsis that outlines the key points in the business plan. As stated by Lavinsky, “The Executive Summary must communicate to the prospective investor the size and scope of the market opportunity, the venture's business and profitability model, and how the resources/skills/strategic positioning of the Company's management team make it uniquely qualified to execute the plan” (Lavinsky, 2010). The Executive Summary is often the first thing an investor will read, so it has to be compelling as it shows the investor how the business will work.
The Company Analysis gives a general idea as to what the company is about.  “It describes how the company is organized, what products and services it offers/will offer, and it goes into further detail on the company's unique qualifications in serving its target markets,” (Lavinsky). The Company Analysis is the foundation for the company.
The Industry Analysis is the breakdown of the business’s industry. It assesses the market by examining the industry development, successes, failures, economics, etc. In line with the Industry Analysis is the Customer Analysis. It evaluates the customers that the business serves. This section allows the business to identify its target demographics and their needs.
Another key component that falls in line with both the Industry and Customer Analysis is the Analysis of Competition.  This section identifies the businesses competitors. It also assesses their strengths and weaknesses while highlighting what makes the business better. 
The first five key components are important because they are, often times, the only part of the business plan that an investor will read. If the invested is not impressed by these five components it is likely that he/she will not continue to read the business plan. If successful the next five key components can secure the deal.
Strategy, marketing, company operations, financials and manage make up the final key components. They breakdown just how the business works and how it will succeed. The first step in that success is marketing.
The Marketing Plan explains how the business will reach customers. It describes the company product and/or service. The component also addresses the promotion plan, product/service pricing, and all other areas dealing with marketing.
The Operation/Design and Development Plan’s primarily focus is on the process for developing the product or executing the service. Closely related to this process are management and the Management Team component, which simply states and qualifies the people responsible for the successful execution of the work.
The Financial Plan involves the money. It breaks down the company’s revenue.  “The financial plan assesses the amount of capital the firm needs, the proposed use of these funds, and the expected future earnings,” (Growthink, 2010). The Financial Plan follows the money closely. It is also the area that shows the company’s profit. Investors pay very close attention to this area, because they want to know how their money will turn a profit.
The last key component is the Appendix. This area is reserved for material that supports the business plan. This can include; financial projections, support letters, industry and/or competitor reviews, cliental and/or customer lists, etc.
It is crucial that these key components are considered carefully when preparing a business plan, as they are key to successfully securing an investor. But the secret key is to think like a funder when preparing a business plan. Turo says, “When creating your financial projections, think about how the funder will perceive them” (Growthink, 2010). Ask yourself, what type of return will the funder be looking to receive?  What types of things will pique an investor’s interest? These are the type of answers that a consultant can assist you with, so Lavinsky suggest that entrepreneurs should definitely speak with a business plan consultant.
Consultants can also help business owners avoid common business plan pitfalls. Sometimes a business plan can get noticed for the wrong reasons. Business owners should avoid these pitfalls. The key is to learn how to create a business plan long before you begin writing one.
Two common pitfalls are professionalism and lack of information. For example, presentation is important when it comes to professionalism. Do not include colorful paper or fashion forward graphics, fonts and artwork on the cover sheet. This is unprofessional and it is the quickest way to get your business plan discarded. Do not avoid explaining your financial assumptions, and do not try to convince funders that you have no competition. According to Growthink, “The most attractive plan to an investor shows a large potential market for the business's products or services and that there is a need that the business is particularly poised to satisfy,” (Growthink, 2010). So, entrepreneurs should find a large market with a need and provide a service or product to fulfill it.
Both Turo and Lavinsky agree on the ten key components. These components lay the foundation for a strong business plan. They are the mechanisms that assist investors in making a decision about whether or not to invest.  Other experts agree with Turo and Lavinsky as well. All business plans templates provide some version of these ten components.  Entrepreneur and author Cavyl Stewart agrees as well. He states,” Like a good recipe, a business plan needs to 
include certain ingredients to make it work. When you create a business plan, don't attempt to recreate its 
format” (Cavyl, 2004). If you follow the steps, utilize the key component and present investors with a great idea; you will gain their attention.
The Growthink partners provided some very useful information, much of which we will apply to the Kai Productions/Reel Walk Cinema, LLC business plan. As filmmakers and visual people, our first instinct is to want to make the cover of the business plan eye catching. We have learned that this is a definite pitfall. Funders don’t want to see how creative you are in your business plan. They mainly are interested in two things, information about your company and how the business will make them a profit. One other important understanding that we will apply to our business plan is completely developing the 10 key components. Investors are interested in complete concise explanations, not wordiness and under explored components. Therefore, we will be sure to provide the necessary information to address all of the key components. Last, the partners at Growthink have convinced us that it is necessary to seek advice from professional business plan consultants, and that we will do.

The first business plan expert I have chosen is Dave Lavinsky, founder of Growthink and president of Growthink Publishing. Dave is a successful entrepreneur. He has developed more than 100 business plans, has won the Anderson School at UCLA’s Knapp New Venture Competition, helps many companies plan for growth, and wrote a business plan for KeySpan Energy Services which went from nothing to more than $1 billion worth of revenue in under 3 years. His MBA is from UCLA, a Bachelor’s from the University of Virginia.  Married with 2 kids, he lives in New York City. (, 2010)
Mr. Lavinsky states in his article Key Components of a Business Plan that there are ten key points to address in a business plan. These are Executive Summary, Company Analysis, Industry Analysis, Analysis of Customers and Competition, Marketing Plan, Operations and Development Plans, Management Team, Financial Plan, and Appendix. In his video presentation titled “How To Quickly & Easily Finish Your Business Plan In 8 Hours or Less”, he details some of what he believes to be the most essential elements of a good business plan that many people do not include. These are:
1. A one-line summary of what your company does - This cuts right to the chase of the matter and helps potential investors know exactly what they are doing. Dave says he has sat on many panels hearing pitches and many times it is unclear to the investors what the company does. For this reason, he stresses the importance of this element.
2. Financial Model – A summary of finances, how and when investors will be paid back, and sales projections are essential to the success of a business plan.
3. Risk Mitigation Milestones – For every milestone your company achieves, the risk of investing diminishes significantly. Investors want to see an action plan to prevent the potential for failure.
4. Your unique qualifications for success – Dave says this is the most important component investors want to see. Personal qualifications and ideas such as a great marketing campaign must be included so investors know they can believe in you personally. This helps build confidence in the success of the investment.
In this video presentation he also mentions a few things not to do in a business plan. These include wasting your money on business plan software and using sample business plans. Software often ignores the key components he emphasizes, and sample business plans distract your focus from customizing your business plan to highlight your own strengths.   Dave says 90% of all business plans do not include the fourth component, unique qualifications, and it’s a big reason they don’t do very well. He stresses you must include your qualifications throughout the entire document to emphasize your strengths and abilities as a businessperson, and build assurance for investors they will see a return.

One expert, who has written several articles over the years, is David E. Gumpert. Gumpert is a graduate of the University of Chicago, Columbia University, and Harvard’s Business School. He worked as an editor at Inc. Magazine and the Harvard Business Review. Also, he worked as a staff reporter at the Wall Street Journal (, n.d.). He authored many books on business and entrepreneurship. According to Gumpert, the business plan should be created based on it intended objective. In other words, if the individual is looking to attract investors, then the business plan should be tailored to meet the preference of the investor. He stated:
“If you are searching for funding...the first requests you'll receive is this: "Send along your business plan." Before you hang up the phone or acknowledge the e-mail, you may want to ask one question: What kind of business plan do you want me to send...Just keep in mind that whatever type of document you send, it must do more than simply describe your business—it must also sell you and your business and convince the backer you have what it takes to make the business succeed over the long term (, Jan. 2008).”
It is vital that if you are seeking additional funding from investors or banks that you understand them completely. You can do this by researching their previous ventures or reading articles are statements they have released. Like Gumpert said it is the job of the entrepreneur to sell themselves, the business venture, and the potential success in the amount of time, space, and energy the investor is willing to spare. Another important principal put forth by Gumpert is to “burn your business plan! (, n.d.).” Basically, Gumpert puts forth the notion that entrepreneurs should not be focused on crafting a business plan in the beginning. Gumpert stated:
“Increasingly, though, I am convinced that the key to the success of most young businesses is to ignore all the venture capital statistics and admonitions to write business plans, and instead use all the creativity and diligence you can muster to tend to your business. Put another way, you should be doing, rather than writing about what you will do (, n.d.).”
Gumpert explained that the primary focus of an entrepreneur is to build their business and allow it make a name for itself.
David Gumpert, author of several business books including Burn Your Business Plan!, and founder of NetMarquee, Inc., also knows the importance of a well-crafted plan.  However, Gumpert believes writing a plan is not the most crucial step in building a successful company.  Gumpert’s advice is “Act, Don’t Plan” (Gumpert, 2003, paragraph 13).  Even with all the emphasis placed on a well-written document, his experience has shown that investors actually want to see “companies that don’t necessarily need the funds” (Gumpert, 2003, paragraph 4).  The truth is that venture capitalists are presented with countless “great ideas.”  Companies, though, are not built on ideas, but with passion, determination, and hard work.  Starting to build your dream, even without desired financing in place, is an important step.  If you believe in your idea enough to push forward on your own, an investor sees determination.  Your plan must be well written and comprehensive, but words alone cannot showcase your passion.  As Gumpert’s own advisors said: when you are waiting for financing, “get out there and promote yourselves and make more sales” (Gumpert, 2003, paragraph 4).

David Gumpert is co-founder of the internet marketing firm NetMarquee.  Prior to this venture he authored two widely read books: Business Plans That Win $$$: Lessons from the MIT Enterprise Forum (with Stanley Rich) and How to Really Create a Successful Business Plan.  After selling NetMarquee, he incorporated some of the lessons learned in launching NetMarquee into his books.
As an entrepreneur, it is essential to find ways to build and grow your business without increasing debt.  This is more appealing to potential investors. It is important to establish a business plan; however, when seeking financing it is more advantageous to promote your business and establish solid sales.  In Gumpert’s experience, investors were more interested in financial projections covering various scenarios, than a business plan.  Gumpert argues that entrepreneurs should focus their company-building efforts on such tasks as creating a web site that communicates their business model, obtaining publicity, keeping the finances under control, and making sales before thinking seriously about writing a business plan (Gumpert, 2010).
There are five key components to developing a business plan. It includes (1) the Executive Summary which communicates to the investor the business’s relative size and scope as well as the venture's business and profitability model; (2) the Company Analysis which details the company’s strategic direction as well as the products and services it offers; (3) the Industry Analysis which assesses the market segments as well as provides the investor with detailed industry trends; (4) the Analysis of Customers and (5) Competition which convey the company’s ability to meet the demands of its customers, and assesses the competitive landscape, respectively (Growthink, 2010). 
Another key component that must be conveyed in the business plan to the investor (a soft skill) is ‘passion.’  The entrepreneur must be passionate about his new venture.  It is a catalyst to his success and will keep him focused and energized through the challenges and disappointments.
Pitfalls in preparing the business plan:
Business conditions vary day to day.  A detailed business plan is conceptualized and in many instances, based on projections (requiring quite the investment in human resources). This can render the most detailed plan void. 
In Gumpert’s case, the business plan provided no value to him, nor to the growth of his company. The actual plan, which was not written, assumed much slower growth with a focus on decreased debt and expenses, contrary to the written business plan.  Establishing solid tasks that produced measurable results did: enhancing the sales strategy while tightening the reigns on expenses, and aggressively pursuing accounts receivables.  Action spoke louder than words.  “You should be doing, rather than writing about what you will do” (Gumpert, 2010).

Another expert in the field of investing in new business ventures is Simone Brummelhuis. She was an attorney for several years until she turned to entrepreneurship and eventually founded The NextWoman, the first Women’s Internet Business Magazine and community (, n.d.). Brummelhuis echoed the sentiments of Gumpert when she stated “spend most of your planning time creating one (executive summary) that gives the facts and shows your business in its best light (, Aug. 2010).” In plain English, spend your time crafting a plan that is highlighting your business and results in the most positive manner. Also, she stated,
“Meanwhile, entrepreneurs who spend just a few weeks creating a concise plan with an outstanding executive summary have spent their time more wisely. They are giving most investors what they want: fewer attempts at planning the unpredictable – and more evidence of the action they have already taken to build or sell something of value (, Aug. 2010).”
The key point of her statement ”...evidence of the action they have already taken...” She points out that your business plan should reflect the steps already in progress to make a successful business. Similar to Gumpert’s approach, Brummelhuis put forward that you business plan should be based on what you have already done.

Mr. Fred S. Steingold is an attorney that practices in Ann Arbor, Michigan. He is regarded as an expert in small business law. Steingold has written several books on topics ranging from writing business plans to purchasing existing businesses and all the way through selling your business. Steingold writes a monthly column called “The Legal Advisor” which is available through trade publications nationally (Steingold 2011).
Steingold believes that all portions of the business plan are crucial for the success of a new business, but specifically targets the financial forecasts as the single more important. He compares a business plan to a blueprint, if there is not careful planning when entering into a venture such as starting a business, there are bound to be a lot of key elements that are overlooked in the process and you can doom the project from the start. Simply put, “Without a business plan, you leave far too many things to chance” (Steingold 2011).
Steingold believes that solid financial forecasts are not only important for the success of a business, but even more important for companies who are seeking start-up capital from outside investors or loans. Strong financial projections “will help you decide if your business is worth starting, or if you need to rethink some of your key assumptions” (Steingold 2011) and that is obviously a very important benchmark to reach before starting your business; how fiscally feasible it is.
Steingold finds a lack of strong financial projections as a chief pitfall in preparing an effective business plan. Having a novel and solid idea for a business only goes so far if it can’t make money, because that is ultimately what’s required to keep that company going. Especially if you need outside funding this is a must, because your investors need to know that they are putting money into something that will provide a substantial return on that investment. If it doesn’t look like that’s possible, many investors won’t risk their time and money on it. It brings to mind what Jason Singleton stated in his interview on Professionalism about the idea that if you can’t represent yourself positively and professionally, how could you represent someone else in that manner (Bishop 2009). If you don’t take the time and care required to ensure that your company is going to make money, why would someone else trust you with their money?

With over three decades of international business investment banking experience, Mr. Jimmy Lewin is exceedingly knowledgeable about what investors are looking for in a business plan. He is currently the Managing Director of a California based company that provides small business owners with advice on their practices, specializing in financial projections, business plans creation, and strategies for finding their venture (Lewin Linked In).
Lewin holds the same opinion of financials, that they are an important way of gauging whether or not your business can be successful. Lewin also feels that the market dictates the value of your business, not you, so that must also be taken into consideration when writing a business plan. He cites three main categories of qualifying your business: hard numbers, soft figures and intangible assets. Hard numbers are things like historical records of sales, liabilities, cash flows. Soft figures are projected cash flow and income figures. Intangible assets are things like intellectual property, brand strength, quality and location.
As discussed in the previous paragraph, Lewin cites the inability to qualify your companies place in the market as one of the major pitfalls in creating a business plan, and subsequently starting a business. “The value you place on your business may not be what the market values it at.” (Lewin) There must be inventory taken on what market void you’re filling, if there’s a reason it hasn't been filled already, whether making money is possible in the location you’ve chose for your company, if your brand has enough strength to hold up your business idea, and several other factors.

One major thing Steingold and Lewin agree on is that it’s not the value that you place on your idea that is important, it’s the value that the market and the customers place on it that is what keeps your company healthy and in business. Obviously for getting your company financed, there is a need to convince your investors of the company’s relevance and the potential to make money with it. This relates to all of the other portions of the plan where each section is meticulously laid out, from marketing the company, to having competent employees and management to represent the company, to having a solid expansion or exit plan.

Maureen Burke has been advising entrepreneurs for over 13 years as a consultant, and is also a Lecturer at The Yale School of Management and The Yale School of Forestry Studies, where she advises on non-profit business plans.  Ms. Burke worked on Wall Street as a bond trader prior to her academic career.   In her lecture, “How to Write a Business Plan,” given at The Yale Entrepreneurial Institute in 2008, she identifies key elements of a good plan.  Certainly, good grammar and writing skills demonstrate intellect and attention to detail.  Ms. Burke underscored the importance of a concise plan that is not weighed down with irrelevant research or lengthy description. An entrepreneur should know their product and target market inside out, but an investor is not interested extensive research.  On the contrary, the investor needs to see the road forward – how you make will make money, how you will market your product, and, eventually, how you will exit the company.   For example, details of your management team’s experience should only include relevant information. Don’t include details about your executives’ undergraduate degrees, for instance, if they aren’t applicable. An investor only has a limited amount of time to read your plan. On the other hand, Burke noted that the marketing sections of business plans she reviews are often too vague.  “Maybe people think that products sell themselves,” Burke mused.  Of course, they don’t.  Existing products are already clamoring for a share of the market; investors need to see how your product will attract attention and make the sale.  Another good tip Ms. Burke shared in her lecture is to constantly be evaluating your Marketing Plan, and then channel your funds to the most profitable channels.  A business plan is an idea conceived, but the plan can only be successful through application and review.

William Sahlman is currently the Dimitri V. D'Arbeloff, which is a Chair position at Harvard Business School honoring a 1955 Harvard Business School graduate by the same name. Sahlman began his college experience at Princeton University, receiving an A.B. in Economics.  He then went on to Harvard, where he received an M.B.A. and a Ph.D. in Business Economics.  With his strong educational experience he began and currently focuses on entrepreneurial endeavors and the financial and investment decisions they make for their company. Sahlman is Senior Associate Dean for External Relations at Harvard Business School and is also a member of several boards of directors or board of advisors of private or non-profit companies.  This makes Sahlman unique is his expertise and numerous publications on business plan techniques. 
Mr. Sahlman’s most notable publication on business plans is a publication he wrote 14 years ago for the Harvard Business Review titled “How to Write a Great Business Plan.”  From this publication, the critical and key components to a successful plan are The People; The Opportunity; The Context; and Risk and Reward.   He does a great job at describing each component and its importance to the overall plan.  The people are obviously important because they make up the organization.  Individual talent and expertise as well as teamwork are essential to a successful company.  The Opportunity is important because the specific market needs to be both expanding and attractive to the company.  The Context is important because it needs to tie all aspects of the business plan and the awareness that the market can change dramatically and without notice, and the company has to respond accordingly.  Risk and Reward is how the company plans to adjust to the three other components. 
Mr. Sahlman also warns about the biggest downfall to business plan writers, which is simply arrogance.  He states in his article a simple way to think about the business plan as a whole.  “A plan must demonstrate mastery of the entire entrepreneurial process, from identification of opportunity to harvest.  It is not a way to separate unsuspecting investors from their money by hiding the fatal flaw.  For in the final analysis, the only one being fooled is the entrepreneur.” (Sahlman, 1997). 
When asked in an interview conducted in 2008 when Sahlman’s article has been issued in book form, Sahlman mentioned the importance of a global plan.  “We live in a world of democratized access to ideas, human capital, and money. There are fabulous global ventures being started in every corner of the globe. These ventures can raise money locally or globally. They can disperse talent in many countries.” (Silverthorne, 2008)  Many business aspects have changed since Sahlman first published “How to Write a Great Business Plan,” but the general concepts are still important and relevant for any perspective entrepreneur.

Michael Porter is also a faculty member of Harvard Business School.  He is currently the Bishop William Lawrence University Professor, which is the highest faculty recognition that can be awarded at Harvard.  He is a leading authority on competitive strategy, which makes him an expert in the realm of business plan development. 
Mr. Porter is an expert on corporate strategy, and in his book On Competition, he highly suggests and reiterates the need for companies to stand out from their competitors.  He demonstrates the importance of leadership within the company as well as corporate social responsibility.  He explains this through a diagram, which is also displayed in the references section of this paper.  Porter describes how competitive forces drive the rivalry of existing companies.  These forces are powered by: the threat of entrants, the bargaining power of suppliers, the bargaining power of buyers and the threat of substitute products or services.   This is critical to not only a business plan, but also when the business launches and in the first few years of existence. 
The threat of entrants is when companies launch into the industry with new and innovative ideas.  “New entrants to an industry bring new capacity and a desire to gain market share that puts pressure on prices, costs, and the rate of investment necessary to compete.” (Porter, 2008)  The bargaining power of suppliers is when companies need to negotiate with other companies regarding things such as labor and raw materials.  The bargaining power of buyers is when companies need to negotiate with the customer regarding prices and incentives to buy their product.  “As the factors underlying the power of suppliers and buyers change with time, their clout rises or declines.” (Porter, 2008)  The threat of substitute products or services is probably the most important, as buyers and customers can decide if they want to utilize a certain company which can influence the companies performance.  When analyzing companies competitors, one must not equally research these forces, but prioritize and pay attention to the important ones.  This is what Porter believes to be a severe pitfall.

David Lee is a General Partner at SV Angel. He recently was involved on a panel of professional venture capitalists at the TechCrunch 2010 Disrupt in New York. His company focuses on funding ventures that deal with fusing technology and entertainment.  Before partnering with Ron Conway, Lee was with Google and StumbleUpon where he led the business development aspects of both companies.
The second individual I have chosen to focus on is Ron Conway who is David’s partner at SV Angel.  He has been an Angel Investor for over 15 years.  Some of his companies he has helped fund include Google, eBay and Tweetdeck. 
Core and fundamental facts are always essential no matter what the proposed business is.  There are a number of ways in which a presentation that is being pitched to an investor can be creative, but at the end of the day it is essential the information is available.  Also it is imperative that the information is able to justified, in an order that makes sense and is neat and without errors.  A first impression is lasting and therefore it is key to have a fully professional and thorough plan.
Another key to having a successful plan is having a back-story that engages the investor into why you are so passionate about the plan.  If you as the creator of this new business don’t show a passion or can provide a way for the investor to somehow connect tactically to the plan how can it be expected that they would want to invest in your company if you show no invested passion in it.
David Lee also expresses how important it is to have a clear understanding of what it is that you as a business owner want for your company to accomplish.  Having a true understanding of what you are selling to an investor is crucial in getting them on board.  Otherwise if you don’t know what you are talking about or not being prepared you will wind up failing more times than not.
Not having enough Data. Lee expresses in his panel interview on that no matter how much attention is paid to the pitch or the presentation, if the data is not available or is inaccurate the business plan is not going to get funded.  He expresses that it is great to have attention grabbing presentations but no substance still is just that, no substance.
According to Ron Conway, one major pitfall he sees is when an entrepreneur needs the VC for more than just funding but rather hand holding. Also so often there are plans that are pitched without being truly vetted or developed. For him it is so crucial that all the planning is done before hand. He does not want to be in a place where he has to do any legwork to ensure his investment is going to be worth anything.  This goes back to the data as related by David Lee. So often an entrepreneur will develop an idea but not the whole concept. They will be able to pitch a vision and can’t back it up. Or they develop a business plan and it’s not complete or it’s based on something that requires extra work to prove its viability. So in a nutshell it is essential that as a business plan is being developed it is not rushed and the concept is fully expressed to show it’s a viable investment.
There are several key similarities between both David Lee and Ron Conway is that they both realize that risk is present. They also know that because there is an inherent risk in funding a start-up there must always be a clear and concise plan.  They both do not want to be bothered with plans that are not truly developed. They both do not want to have to deal with figuring out anything or having to be relied on for additional resources. In other words, they are in the business of finding new companies and vetting them then funding them. They expect that the entrepreneur will be responsible for fulfilling the needs of the plan.
They also see that the age of being an angel investor or a venture capitalist has come. Though the ability to be the financial backer has been around for a long time, they feel that there are more and more opportunities that are coming present with the ever increasing technology that entrepreneurs are engaging in. 

After a near 30-year career as an Operating Executive in the retail industry, Philip Schlein joined USVP in 1985. Prior to joining USVP, Mr. Schlein was President and CEO of Macy’s California. In his time there, he helped their sales grow nearly a billion dollars in only 11 years. He has also served on the Board of Directors for Apple Computer. Mr. Schlein has a B.S. in Economics from the University of Pennsylvania.
The Management Team is a very crucial aspect of the business plan according to Mr. Schlein. (2009) This is so because the product pitched may not be that great, but the management team behind the product could be and would greatly improve the good product. This aspect of the business plan can make or break a plan from taking form into an actual business or just another idea.
The Business Model is also very important because the investors do want to know how a business is going to earn income, and where is the revenue going to come from. Most investors are now looking at five-year plan with the first few years being fairly detailed, giving room for the last few be educated ball park figures of where the business could potentially be at.
Lastly another top key component for a business plan is the product itself. Mr. Schlein says he does not want to invest in a product that is not a need, it cannot be just nice to have; there must a “need-to-have” aspect for this product. (Abrams, 2009) A product could be good, but all other aspects of the business plan have to fully support it and make it be as successful as the business plan encourages.
Mr. Schlein also says that market size, competition, and how much money it will take to gain a potential acquisition are very crucial keys he looks at when viewing a business plan. (Abrams, 2009)
A few pitfalls frequently noticed by investors when creating a business plan are the length, making the business plan a “team effort”, and design of the business plan.

Guy Kawasaki worked at Apple Computer starting around 1980 and in 1987 he left Apple to start a few small businesses that developed software. However, in 1995 Mr. Kawasaki returned to Apple Computer as an Apple Fellow. After a few years he left Apple and started his own company with a few others called Garage. Garage provides matchmaking services for angel investors and entrepreneurs. Now he is a partner at Garage Technology Ventures and is also cofounder of Alltop, an online magazine rack. Mr. Kawasaki has also authored nine books. Guy Kawasaki has a B.A from Stanford University, M.B.A. from UCLA, and is also an Honorary Doctorate from Babson College.
There are several critical and key components that investors are looking at when evaluating a business plan. The Executive Summary, Management Team, Business Model, and Product are the main four areas that are strongly observed by investors.
According to Mr. Kawasaki (2006) a business plan developer should spend around 80% of their time working on the Executive Summary. It is encouraged to spend so much time working on this component because many times it is the very first piece of the company the investor views. If the investor does not like what they see they will not want to view any other part of the business plan.
Many investors do not want a 50 or 60 page business plan including the appendix. The key number of pages is around 20 to 30 pages, anything more than business plan loses a lot of its effect on the investor. Kawasaki even outlines how many pages each critical section should be and with that done he has only one page per section with eleven sections, giving the business plan developer half of their plan complete. (2006) Many investors find that potential businesses usually feel the need to elaborate their plan in hopes that the length means they instilled much effort into completing the plan.
One person, preferably the CEO or founder of the potential business should be the person completing the business plan. Many investors find that this is often done as a team project and writing styles differ along with information and style of the presentation. This hinders the project especially if the business plan is just copy/paste and some editing. If one person writes the entire plan is knows it verbatim, then that is all that is needed.
Finally the design and presentation format of the business plan can easily be a turn off for a potential investor that could look at the cover and not want anything to do with it. Many investors find that a cover that is too “fancy” shows that the developer has too much time on their hands and should be in design and not writing business plans, unless however the “fancy” is part of the business and shows the creative influence of the business plan. Investors want a professional look to a business plan. They want a plan that is nicely formatted and is clear and concise.
Mr. Kawasaki feels that the Executive Summary is the number one aspect of viewing a business plan, while Mr. Schlein wants to know more about the Management Team. Respectively both sections of the business plan are the very top priority for each individual, but they differ in priority for these two gentlemen. They also differ in the value of a Business Model and the Product. Mr. Kawasaki says the Business Model is more important to him than the product, however, Mr. Schlein feels the exact opposite. Both of these are very critical aspects of the plan, however, they as well differ in priority.

Dr. Guy Kawasaki was born in Honolulu, Hawaii. He attended Stanford University, earning a BA in psychology. He then earned an MBA from UCLA, and later received an honorary doctorate from Babson College. After college, Guy worked for a jewelry company counting diamonds. Later, he obtained a job at Apple through his college roommate. Upon leaving Apple, he started a Macintosh database company, and then started Fog City Software. In 1995 he returned to Apple as an Apple Fellow. During that time his job was to maintain and rejuvenate Macintosh’s cult following. Again, he left Apple to start his on company. This time he started Garage with Craig Johnson of Venture law Group and Rich Karlgaard of Forbes. This company sought to provide matchmaking services for angel investors and entrepreneurs. Today, it is focused on being a venture Capital firm and making direct investments in early-stage technology companies. Currently, he is the managing director of Garage Technology Ventures. He is also the author of seven books, including The Art of the Start, Rules for Revolutionaries: How to Drive Your Competition Crazy, Selling the Dream, and The Macintosh Way.
 Kawasaki stated in The Art of The Start (2004) several components that a business plan should possess in order to catch an investors eye. First, one must build a business. By doing this, it will make investors clamor to give money to the business, or show that the business does not need their money. Next, he advised business plan writers to get an introduction. By this he meant having the business introduced by sources that the investor respects. These sources include current investors, lawyers and accountants, other entrepreneurs, and professors. This will give the business plan writer an edge that may be the difference in receiving and not receiving funding. Further, Kawasaki gave a list of items that can contain flaws that would result in rejection by investors. The areas are: intellectual property, whereby the risk of lawsuits exist inside company; the capital structure, where ownership is spread out over founders, and substantially overpriced or underpriced previous rounds; the management team, consisting of married or related co-founders, un-qualified friends, or team members with a lack of industry experience; stock offerings, where there is a grant of stock instead of stock options to consultants and vendors in lieu of payment, common stock sold to friends and relatives at high valuations and solicitation of investors not qualified according to securities laws; regulatory compliance, where there is evidence of noncompliance with state or federal laws/regulations, and nonpayment of payroll taxes.
In the preparation of a business plan, Drs. Timmons and Kawaski each mention certain pitfalls that should be avoided. Timmons, Spinelli, and Zacharakis advised in Business Plans That Work (2004), that statements in the plan need to be supported with data, and, that data is easier presented in graphic visual form. The source of the data, methods and assumptions used, need to be included in the plan. These items assist in effectively articulating the business opportunity to stakeholders. Other pitfalls include starting the Industry Analysis section with a description of the company. He stated that this section should focus on highlighting a space or gap that is underserved. Doing this will create a stage to introduce the company. Further, the target customer should be examined in detail using demographic and psychographic information. Finally, Dr. Timmons advised to acquire an understanding of what the market place values and key success factors. 
Dr. Kawasaki pointed out several pitfalls concerning the preparation of business plans. He stated that na├»ve entrepreneurs seem to believe that a business plan will produce an awestruck reaction followed by the question: “Can you send me wiring instructions for the money?” This leads to writing the plan for the right reason. Next, he mentioned that most entrepreneurs try to perfect their plans then produce PowerPoint slides from it. This is described as making the plan the basis of acquiring investors, and later, developing the pitch. He advised that a good business plan is a detailed version of a pitch as opposed to the pitch being a distilled version of the business plan. Other pitfalls include exceeding twenty pages in length, selecting more than one person to write the plan, and not including the assumptions that drive the financial projections.
Dr. Kawasaki’s view in The Art of the Startup is that a business plan is of limited use for a startup because it is based on assumptions. The two do seem to have agreed upon the fact that writing a business plan is beneficial to the entrepreneur in gaining knowledge regarding their business venture.

“Scott brings more than fifteen years of combined experience in planning, developing, financing, marketing, and managing entrepreneurial and real estate based ventures both as a principal and a consultant” ( Scott has managed or supervised over six hundred strategic business plan consulting engagements for companies in nearly ever industry and stage of development. Wow. This guy seems like he has done it all. It seems like is the business plan guru.
Scott has proved to be a dominant force in the business world. One of the reasons why he is so successful is because he believes in social marketing planning. This is quickly becoming one of the most, if not the most, efficient way for a small business to advertise themselves and reach larger target markets. Scott advises that social marketing should be a top priority for any business that is looking to build its identity and compete with other businesses in their desired industry.

Philip C. Holland is the original founder of the Yum Yum Donut Shop, Inc back in 1970. While under his ownership the Yum Yum Donut Shop, Inc franchise became the largest privately owned chain of doughnut shops in the entire United States. In 1992, Mr. Holland founds My Own Business, Inc., in an effort to share his knowledge and experience with everyone. By August 2000, MOBI or My Own Business, Inc. reached worldwide with the utilization of the internet. Since that time, Mr. Holland educated many entrepreneurs worldwide and written many articles starting businesses.
Mr. Holland has various key or critical components any new business owner should know and be aware of prior to embarking on the journey to start there own business. Mr. Holland believes the most important decision you can make when starting your own business is defining your market. As choosing the wrong market, can spell defeat long before your company even gets off the ground. Additionally, Mr. Holland believes it is vital for you to create an outline of your business plan in order to give you an understanding of your economic prospects and as a potential tool to test the marketability of your business with potential clients. Lastly, be very thorough in your business plan as you will gain a better understanding of what you expect to accomplish and how to adjust accordingly with your strengths and weaknesses.
In regards to pitfalls to avoid when writing a business plan, Mr. Holland suggests not falling into the trap of estimating really high sales or anticipating lower than realistic costs to business in your financials. As this information, can highly affect your creditability when dealing with investors, and possibly lead you to request inadequate financial funding. Additionally, do not try to bury your weaknesses as projecting them in detail and indicating how you will work around them or improve will increase your overall chances to not only receive financing but to have a successful business. Finally, do not get ahead of yourself with a flashy business idea, if you can attempt to test your business plan out beforehand to judge its feasibility.

My expert on business plans is a corporate lawyer based out of Manchester, England name Graham Small. Graham Small has served as partner for numerous law firms throughout England including DWF, Rowe Cohen and now at Lewis Hymanson Small. Mr. Small has also been featured in many business articles discussing his opinions on what aspects of a business plan are important, and which you should leave out. Which is understandable due to his over 20 years of law experience, and reviewing more business plans then many could even imagine.
One of Mr. Small’s major gripes with many start-up entrepreneurs is a lack of discipline when preparing a business plan for investors. In his article “Business plans: the dos and don’ts” on he indicates the numerous amount business plans he has had to review in some form or fashion over the years. And he goes on to say “Many are poorly prepared and don’t make sense. This may sound harsh – but it’s true.” Another do Mr. Small points out is to include solid facts and figures within your business plan as all your projects must make sense. Additionally, Mr. Small advises new start-up entrepreneurs to put themselves in the banker’s position, what would you want to hear from someone wanting to borrow your money for a new business.
Mr. Small also has some don’ts he expects all new start-up entrepreneurs to remember as well, while writing their business plans for investors. Do not make assumptions about what or your banker/investor knows or does not know about your business. These individuals are likely faced with thousands of business plans every year ranging in any category, be straightforward and provide detailed facts to make there job easier. And just because you present a lot of nice fancy figures, does not mean you can forget to inform your investors how and when they will expect repayment of their investment. In the end, use common sense and if your plan make sense you should receive the financing you desire.

Mr. Gartner is a professor of entrepreneurship at the University of Clemson. He obtained his Ph.D. in Business Administration (Business Policy), his Master of Business Administration (Business Policy), and his Bachelor of Business Administration (Accounting) all from the University of Washington. Mr. Gartner has taught at: the University of Virginia, Georgetown University, San Francisco State University and the University of Southern California. He is the 2005 winner of the FSF-NUTEK Award for outstanding contributions to entrepreneurship and small business research. Mr. Gartner has been in the field of business since 1982 and has won many other awards for his contributions in the field and study of entrepreneurship. Mr. Jamie Fragola is founder, co-chairman and Chief Operating Officer of Project Consulting Group, founded in 1998 and is one of the fastest growing companies in Minnesota.
When experts and investors are looking at a plan that want to see that someone has done the proper amount of research and financials and that those financials can be “explained instantaneously” (Henricks, 2008). Gartner feels that professionals who are really seeking to start a business and show a dedication to that dream through the development of a plan for that business will also develop “more stuff” that can be further valuable to that organization (Henricks, 2008). Mr. Fragola feels that by developing this strategy for your business that the plan will “provide a crucial link between executive vision and the work of the enterprise” (Fragola, 2010). He also feels that this practice “promotes organized and repeatable processes by which organizations can link strategic plans” (Fragola, 2010). Most of the experts agree that without proper research a business plan is nothing more than “guesswork” (Henricks, 2008). With the proper research and development not only with an appropriate business plan be developed but a knowledge needed to negotiate and express those ideas that are in that plan to potential investors will be acquired. Also, in today’s environment a social responsibility movement is gaining momentum to re-establish trust in businesses. The social entrepreneur, has been gaining…attention” and through that attention many “top-ranked business schools” have taken notice (Tyson, 2004).  Therefore, not only must a potential entrepreneur have an extensive knowledge of what the financial benefit of the organization will be but also what benefit will it bring to the community as a whole.
As mentioned above, a proper knowledge of the information contained in the plan must be gained. If a portion of the income statement, balance sheet or cash flow cannot be simply answered; most experts agree that it shows a lot of guesswork and lack of knowledge in what is being presented. Also, plans do not need all the extra fluff and a 20 to 40-page plan is no longer required by investors as it once was (Henricks, 2008). Gartner states “investors want to see that an entrepreneur has actually examined the market for a product or service, identified potential customers, assembled a capable team, devised a business model and more” (Henricks, 2008).

Mr. Fragola in his approach to business development looks at the organization of the plan as a way to use your resources wisely to save money and cut costs. However, Mr. Gartner’s focus is that a business plan is a way to gain capital in the formation of a corporation or as Sean Hackney, co-founder and co-owner of Roaring Lion Energy Drink, puts it “the core principles of what the business is founded on in such a way that the purpose would be finding money” (Hendricks, 2008). While their outcomes differ slightly, both of the experts agree on the importance of having a plan of action and that those steps show a commitment to the project that will normally push an individual to strive harder to gain that business. “You’re two and a half times more likely to get into business” if a proper plan is developed (Henricks, 2008). Fans of business plans and skeptics both area on one point: “securing funding almost always requires a formal plan” because investors want to see research and the hard facts (Henricks, 2008).

The first person I interviewed is Sean Christiansen who is Chief Technology Officer at the University of Central Florida Venture Lab, a program, which provides business coaching, mentoring, and intellectual property assessment to early stage technology ventures.  He is a successful angel investor, having previously been involved with the Winter Park Angels, and is the current founder of Catapult Capital, a company that specializes in early stage investing.
The key components Mr. Christiansen touched on were barriers to entry, the market, and the management team. Barriers to entry are important because not only does it explain a company’s product or service, but also it “informs your investors on how you will prevent your competitors from taking away your customers” (Schwartz, n.d.).  According to Mr. Christiansen, barriers to entry go together with core competencies of the company. “Basically, they look at a company’s strengths and its expertise within its own market. These define the company, the product or service they offer, and their rank in the market” (Christiansen, 2010). Core competencies are what provide a competitive advantage in the market.    
Secondly, he looks at the market. This is the trickiest factor because sometimes the markets are not always there. He mentioned how some markets are great and fast growing like the application market for the iPhone, however, markets like real estate has become a taboo area due to the economy. He mentioned there are markets an investor cannot predict, such as the ringtone market or Google creating a market for search engines.
Finally, he looks at the management team and what they bring to the table. They look at the past experience of the start-up company’s members.  They research whether the management team previously failed and they see this as a good thing because it shows they are aware of their mistakes. Finally, they look at whether the company was given equity investments in the past and if they established exit opportunities for investors.

Jack is currently the business development manager at UCF Venture Labs. He mainly vets the deals before they are submitted to investors. He graduated from UCF with a degree in finance and marketing. He then pursued a master’s degree at UCF’s one-year-full-time MBA program. Mr. Henkel and Mr. Christiansen are a part of the Angel Capital Association, and they hold regular angel investor workshops at UCF Venture Lab.
The key components Mr. Henkel looks at are due diligence and the management team. Due diligence is “the research required to make certain that a business opportunity is as promising as it seems” (Filbrich, 2008). Mr. Henkel feels that due diligence is key because angel investors are risking a lot when investing in a start-up. In order to show me how risky angel investing is, Mr. Henkel shared with me a study done by The Kauffman Foundation and the Angel Capital Education Foundation. The study looked at the largest set of accredited angel investors collected to date, with information on exits from 539 angels who experienced 1,137 exists from their investments.  The results showed “fifty-two percent of all exits returned less than the capital the angel had invested in the venture and seven percent of the exits returned more than ten times the money invested accounting for 75 percent of the total investment dollar” (Wiltbank & Boeker, 2007). The study concludes that more than half of the exits end up in returning less capital to the investor than what they invested, but also shows that those few really profitable and successful deals make up a large percentage of the total investment dollars.  Due to the risky nature of angel investing, Mr. Henkel wants to see that the companies coming to them did their research and did not just make numbers up. Mr. Henkel (2010) believes it is crucial because “in the areas of a plan where estimates need to be made, I am more confident in these educated guesses when it is evident that a business owner did their due diligence.”
Finally, he looks at the management team. He feels management is crucial because these are the people that you are really investing in. Since the management team are the people the investor is trusting with their money, an investor wants to see a knowledgeable team with past experience and a proven track record.
Both Mr. Christiansen and Mr. Henkel agreed that the management team is a crucial aspect of a successful business plan. Both thought it was key to look at the management teams past experiences, successes, and failures. They also agreed that a company must thoroughly research the market, their products and services, and their competition. This allows the company to understand where their idea fits in the current market and how it will fare against the competition. Finally, they both agreed in the most common pitfall they see which is an overly optimistic business plan. This comes in many forms, but they have seen business plans come to them stating that they have no competition whatsoever, essentially an owner feels their idea is so unique that they are the only option in the market. Also, they have reviewed plans where the business owner is too optimistic when it comes to their sales estimations and they do not do enough due diligence to see potential problems their business idea may face.

Tarby is the CEO and Chairman of a private equity capital company called Sweetwater Capital Corporation.  Sweetwater seeks to provide finance and capital to Entrepreneurs through events called “The Gathering of Angels”.  These events are held across the United States where private investors and entrepreneurs meet and seek investment opportunities.  They also offer counseling and advice to entrepreneurial companies and their management.  The mission of Tarby’s monthly meeting of private, high net-worth investors is to provide first stage “seed level and angel capital” financing to startup and early stage firms in addition to providing capital for growth and or expansion. 
There are several critical and key components that investors are looking for in a plan.  Mr. Bryant feels that one key component is competitive advantage.  He states, “ It is very rarely that an entrepreneur raises capital from private investors without clearly defining the competitive landscape of their business and how their business solution has a clear competitive advantage beyond others in the market” (T Bryant, personal communication, August 21, 2010).  Investors want to know the “barriers to entry” for your venture and how you will keep competitors from being in the same exact business.  In the investing world good ideas are abundant.  Bryant feels that the investors involved in “the Gathering of Angels” are impressed when a presenter has lined up potential customers who are willing to test or sample their product and commit to purchase or patronize it.  An entrepreneur who can demonstrate that they can create paying customers is far ahead in terms of funding from investors than the entrepreneur who simply has a business plan and idea.  Angel investors want to see that you understand your industry and have had some relevant experience. 
There are pitfalls these two investors have mentioned concerning the preparation of a business plan.  Mr. Bryant mentioned that investors have specific objectives as to the requirements of the ROI.  He also stated that many start up companies seeking initial capitalization often times have little or no expertise in that area resulting in critical errors.  He specified that the numbers must be clear, realistic and shows the chance of prosperity.    A realistic valuation and a reasonable assurance of return will go a long way attracting today’s individual investor (Worrell, 2003).

Greg Alexander, the CEO of Atlanta Family Fun Centers.  Besides running his own thriving business for 18 years now, his secondary source of income is being a venture capitalist.  Mr. Alexander has invested in a number of Atlanta based businesses within the last ten years.  Greg plays an active role as investor from a local car dealership to a monthly-published magazine.  His portfolio is astonishing to view. Mr. Alexander, with every business he invests in, considers himself a “value added investor”.  He involves himself in every venture and takes an active role in the businesses.  He brings valuable knowledge about business itself, ability to mentor, creative ideas and contacts.
Mr. Alexander is very demanding when it comes to choosing to invest in a venture.  He has to be due to the fact that he is not only investing his own money but his family’s investment group’s money also.  When looking at business plans he must reduce his risk.  Key components that are important to him are first who will be managing the business and if they have a proven track record and adequate experience.  Another key component is what is the business’s competitive advantage and if there is a need for it. He requires that the business plan clearly show that research of competition has been done thoroughly and what strategy you have set up to contend with competitors.   Lastly and most importantly is the financial aspect of the plan.  He clearly wants to see the investment amount being asked, the offering and the ROI terms (G. Alexander, personal communication, August 20, 2010).  
Mr. Alexander has come across numerous business plans and the biggest pitfalls he has noticed is the lack of research and no plan B for expected changes.  He stated that a lot of business plans don’t have adequate research and fail to examine thoroughly the competition.  Every starting company should take their competition seriously.  That is one way a company can find information about what works and what doesn’t work.  What happens if something happens unexpected?   Every business plan should leave room for unexpected changes.  Mr. Alexander’s advice to this pitfall is to create budgets with flexibility and adaptability to change.    
Both experts, Bryant and Alexander, had similar opinions in regard to the value of a business plan.  Two aspects that were similar include the importance of examining ones competition and market.  They both also specified the accuracy of one’s finances and or numbers.  These opinions are very important to the development of any business plan.  Any investor who is interested in investing in a company will first take a look at the plan and see whether it is solid and strategic or not.  In my opinion true innovation and market penetration comes from what we don’t know.  Therefore the research of one’s market and projection of numbers propels us to success. 

Dr. William D. ByGrave is a professor emeritus at Babson College. He teaches and researches entrepreneurship; specifically, business incubation, new venture creation, small business, and venture capital.  Additionally, he has authored over 50 papers on the topic.  He won the 1997 Ernst & Young Entrepreneur of the Year award, and has served on the review boards of 3 entrepreneurship journals.
Like Gumpert, Dr. ByGrave promotes the importance of financial projections, specifically cash flows (sales revenue, operating expenses), and developing a solid sales strategy/establishing a customer base versus time spent writing a business plan.  In addition, he advocates the mantra “just do it.”  A study performed of Babson College entrepreneurs who graduated within a 19-year span concluded that there was no distinction in the success of businesses where formal business plans were developed versus those that didn’t write any.  Dr. ByGraves feels that entrepreneurs must be flexible.  An entrepreneur is more likely to follow a flawed business plan if he spent an inordinate amount of time writing it.  Dr. ByGrave challenges the level of emphasis that academia has placed on business plan development.
Unlike Gumpert who feels a business plan is not necessary, Dr. ByGraves concurs that a detailed business plan provides value to businesses that seek funding.  The business plan is a tool that assists in the funding process, and aids in the analysis, planning, vision, and communication of your business. It ensures that everyone is on the same page.  At the same time, it should be succinct.  The writing process should span no more than two weeks.

Andrea Cockerton founded Mudhut in 2005, a company in England that assists clients in presenting their business plans in various ways. Speechwriting, Investor pitches, Commercial pitches, and Communication Training are all services her company offers. She was a part of an organization called VBN, a software dot com company based out of Cambridge that was a predecessor to social networking sites like Facebook and LinkedIn. She has worked with clients such as Microsoft, and was a board member of the MIT Enterprise Forum of the UK from 2007 – 2008 ( Following the demise of VBN, Andrea became a director of a significant business angel network. After seeing many presentations fall short of investor’s expectations and fail to gain funding, she started her company to assist entrepreneurs. Mudhut works with many different types of clients including technology, law, non-profits, the arts, and academics. In addition to Mudhut, she co-founded a company that teaches self-defense for woman called Brick Handbag. (, 2010)
Andrea Cockerton says that the three most important points to mention in a pitch to potential investors are –
1. The target market that needs your product or service.
2. The team’s credentials and ability to follow through with the business plan.
3. How your product or service is innovative and groundbreaking.
She also says an effective executive summary and solid financials are the foundation of a good business plan, and you should prepare your plan in two ways: a brief ‘elevator pitch’ and a detailed presentation. She expresses the importance of focusing on the profitability of your company or product instead of exclusively presenting how great the idea is, or how innovative it is. Not all good ideas can sell, so she says it is more important to demonstrate the sales worthiness of your product or service instead of how great the product is itself. (Cockerton, 2010). She says most companies underestimate the amount of funding they will need and it is essential to be aware of current market trends and competition so your investors know you are prepared.

Dr. Jeffry A. Timmons was one of the pioneers in the development of entrepreneurship education and research in America.  He was internationally recognized as a leading authority for his research, innovative curriculum development, and teaching in entrepreneurship, new ventures, entrepreneurial finance and venture capital.(Chmura, 2008)
     Dr. Timmons was born in Pontiac, Michigan and attended Colgate University. He then attended Harvard Business School where he earned the MBA and DBA degrees. Dr. Timmons was as a charter board member of the Kauffman Center for Entrepreneurial Leadership at the Ewing Marion Kauffman Foundation. He coauthored more than 20 books including, New Venture Creation, 7th ed. (2007), and the 8th edition, 2008; Venture Capital at the Crossroads, with Babson Professor William D. Bygrave (1992), this book established him as a leading advisor to venture capitalists worldwide. He has co-authored Business Plans That Work (2004) and How To Raise Capital: Techniques and Strategies for Financing and Valuing Your Small Business (2005) with former Babson Professor Stephen Spinelli and current Babson Professor Andrew Zacharakis. Dr. Timmons passed in 2008. (
Timmons presented entrepreneurs with tools to acquire venture capital investors. He described step-by-step plans to create the financial foundations necessary to achieve long-term success. According to Timmons, the critical and key components that investors look for include having significant competitive lead and unfair  & sustainable or defensible advantages, company’s product or service has high value added properties resulting in early payback to user; the product can gain exclusive contractual or legal rights; company has a large, robust and sustainable business model; the product will accommodate a $100 million entrant in five years; company presently has sales $200 million or more and growing at more than 25% per year; has no dominant competitor; has a clearly identified customer base and distribution channels.
     In the book How to Raise Capital (2004), Timmons, Spinelli and Zacharakis stated that the venture capital process occurs in mostly private, capital markets for new, emerging and middle-market companies. These companies have $5 million to $200 million in sales. The preceding components are key due to the perceived risks faced by investors; industry, market and attractiveness of the technology; anticipated growth rate; age and stage of development and amount of capital required.
In regard to the value of business plans, both authors hold varying views. As stated in the preface to Business Plans That Work, Dr. Timmons believed that the business plan is not just a tool to raise funds, but is a process that helps entrepreneurs gain deep knowledge about their ideas. The discipline that the planning process provides helps assess the nature of, and a way to exploit the opportunity.

Paul Grant is the founder of The Funding Game and NextMentor in the Mentoring Program.  In his article, “Why Business Plans are Not as Important as you Think”, he discusses why a business plan may not be necessary to receive funding from investors.  He describes himself on Linkedin as an experienced entrepreneur who has founded a London based company through private equity and debt financing.  He catered business for corporate and retail markets for seven years and now assists many companies at early growth stages.  He was also a former director of Capital Partners where he headed up the business angel division.  Grant has been a passionate advocate for the small business owner and his company gives entrepreneurs an opportunity to network and to learn how to fund the early stages of their businesses. 
When Grant first started his company he spent nine months developing his business plan.  After being in a business for a few years he looked at his business plan and realized that it was totally different from the way his company had actually developed and grown.  He began asking business angels if they actually read business plans after he learned that few business plans were actually getting read.  He learned that a key component that investors are looking for in a business plan is the executive summary.  This is a key consideration because a well-written executive summary is how investors made their decision to meet an entrepreneur.  Once the investor meets with the entrepreneur they can examine how they interact with other company members and how they respond to further difficult questions.
There are several pitfalls mentioned in the article regarding business plans.  The first point that Grant makes is not to make business plan too long. He recommends that it should not be any more than 20 pages.  The reason given for this is that many investors do not read business plans.  So, it should be well defined, short and to the point.  Second, Grant recommends thorough research.  However, this research should not last more than a couple of weeks.  Grant believes that after about two weeks, the focus should be spent more on doing rather than planning.  Finally, Grant recommends paying special attention to the Executive Summary section when writing a business plan.  This can be a major pitfall if it is not well written.  Grant believes that this is the most important part of the business plan because it is what the investor will actually read if they want to invest in an entrepreneur’s company.

Angelo Meneguzzi’s experience ranges from marketing to product development and start-up companies. He specializes in offering expert consult on developing a business and marketing. With over twelve years of experience he has worked with Disney, Hummer Winbald, Upside Magazine, and ABC news (, 2010).
Deciding to open a business takes time, preparation, and experience. Generally the businesses people decide to open are the result of dreams they have had for a long time. Ideally, the business plan is something the individual is passionate about, and has experience in. However, the experience is something not everyone has. When it comes to opening a business without experience in the industry, Mr. Meneguzzi advises against it. Without experience he comments that the invested money will “vaporize before your eyes” (Meneguzzi, 2010). Not having any experience in the industry you wish to open a business in could be disastrous.
If the business plan is something that the founder or founders are indeed passionate about, it may be difficult for them to give up on their dream. There are ways to gain experience. Mr. Meneguzzi suggests working in the industry for a period of time to gain the understanding and knowledge of the industry to make a business successful. He advises to, “…learn this on their time not yours…” (Meneguzzi, 2010). Another option for gaining the necessary industry knowledge and experience is to bring an expert on board. An individual who has worked in the industry for a considerable amount of time and or has successful experience with start up companies within that industry could be the missing piece in having a successful start up business (Meneguzzi, 2010).
It is incredibly important to bring in expertise where the founding members lack it. Without the expertise necessary it will be incredibly difficult to procure funding for the project, and if funding is found somehow, it may be difficult to make the business successful. A failed start up business could lead to experiencing increased difficulty in future start up endeavors. In addition to having expertise on staff, it is important to seek counsel from industry experts as well. Getting multiple opinions allows the opportunity to see issues from multiple perspectives, and makes it less likely for something to go unnoticed. Seeking advice from experts that are not associated with the business allows for an objective opinion that can be invaluable to the business’ success (All Business, 2010).
 Start up business plans have the potential to be over zealous. A start up business that finds itself it multiple industries could find that it is stretched too thin. Mr. Meneguzzi asks a simple question, “Have you been successful in running a business in every one of the areas you want to touch on?” (Meneguzzi, 2010). Gaining the experience in each industry could take many years to complete. Hiring experts in each field definitely adds up quick. Mr. Meneguzzi suggests limiting the business plan initially, keeping it specific to the areas the founder is most familiar with. Once the initial start up is successful, gradually add the features as expansions to the business until the founder has reached the initial capacity they hoped for (Meneguzzi, 2010).
Along with being grounded in reality, having the necessary expertise to guide the business is imperative as Mr. Meneguzzi explains. It is unlikely that financial backing can be procured without the necessary expertise. However, with an expert on staff the business has a better chance of gaining financial support and eventual success. Keeping that in mind, it is also important to not overextend the business by trying to incorporate multiple industries in one business. Starting small then branching out as the business grows will be the best approach.

Jeffrey E. Edelheit has over 20 years of experience in the business industry. Currently, he aides his clients in forming a solid business plan that is grounded in reality. He believes that proper planning is crucial to the success of a business, but having unrealistic plans could be dangerous (Sustainable Business 2010, 2010).
Choosing the location for the business is a very important piece of the overall picture. While one location may be less costly to start up the business in, one has to take into consideration the local market. It is not just about the size of the market, but also the room for growth it may or may not allow. Mr. Edelheit advises to consider the amount of competition a location would offer. If there is competition in the area, chances are that there is a demand for the product in that area giving the business the opportunity to expand on the already established customer base. He also advises to choose a location that not only has a large potential customer base, but also one that has opportunity for repeat and expanding business, “which one is more likely to bring you the best exposure and chances of ongoing customer” (Edelheit, 2010).
A marketing plan is definitely a key ingredient to success for a start up business. Researching the target market will aide in tailoring the marketing plan to be as successful as possible. Marketing is not just about getting the word out about a new business in the area, it is also about informing or educating the market it is reaching. Mr. Edelheit suggests educating the target market on what your business uniquely offers to that your business is set apart from the rest (Edelheit, 2010).
Each of these experts offers advice that is important to keep in mind when starting up a new business. Following the advice of Mr. Edelheit, Simmer Down Brewery would like to build a realistic business plan. Having substantial market and industry research to base the business plan on with goals that are based on realistic limitations is a necessity. It is important to know the limits of the business with the available resources. This could be a piece that determines the success of the business.

Barbara Corcoran is a Real Estate mogul who started with a $1,000 loan from her boyfriend to start a Real Estate Company in New York and turned it into over $5 billion in 25 years.  She has also written a national best-selling book about business called If You Don’t Have Big Breasts, Put Ribbons on Your Pigtails.
According to Corcoran, a great executive summary is a critical component of a successful business plan.  Most investors will not read the whole plan because they have so many other plans to consider.  If you answer the following questions in your executive summary, you are more likely to grab the attention of potential investors:  “What problem are you trying to solve?  Why are you uniquely qualified to solve it?  Is it a good business?  What’s it going to cost?  And how long is it going to take?” (Corcoran, 2009)
Corcoran has several ideas on what not to do in your Business Plan.  Two of the biggest pitfalls according to Corcoran are overestimating your company’s addressable market and downplaying risks (Corcoran, 2009).  Rather than presenting the total market size in your Business Plan, cite the revenue that a company could generate if they captured 100% of the market.  This shows that you know what to expect realistically.  Also, be practical when assessing your company’s risks.  The more honest you are with potential investors, the more they’ll respect what you are saying.
Corcoran’s emphasis of the importance of a great Executive Summary was the most important thing that I could have learned from this assignment.  It only makes sense that most investors will read that, and nothing more unless it really grabs them.  It is much like a movie trailer; if the movie trailer does not grab you, you will not see the movie.  It also made me realize the importance of the Company Snapshot.  It too provides a quick and easy rundown of your business, but at just one page long is even shorter than the Executive Summary, making it easier for an investor to glance over it to see if they are interested in even seeing the whole plan. 
Three of the first questions that all of the “Sharks” ask when entrepreneurs come on the show are: “What makes your product or service different,” “How much profit has it made so far,” and “Why is your company worth what you say it is?”  Corcoran and John have both asked these questions numerous times.  It is important to answer all of these questions in your Business Plan, and it is even more important to be honest about them.  According to John, some investments that look like they are set in stone on the show never happen because the data that is presented to the panel is skewed.

Daymond John is the CEO and President of a clothing company called FUBU.  He got his start in the industry by making hats and selling them on the streets of Queens.  After making $800 in one night, he decided to add a logo to his garments: FUBU, meaning “For Us, By Us.”  Using $100,000 in startup capital, he launched his company in 1994, and by 1998, FUBU had made $350 million in revenues.  He too wrote a best-selling book; it is called Display of Power: How FUBU Changed a World of Fashion, Branding & Lifestyle.
According to John, branding is the most important part of a successful business plan.  The plan should be focused, and the business should be able to be marketed in a way that makes it stand out from all of the other similar businesses (Ribitzky, 2010).  Even if you plan on doing something that has already been done, a great marketing plan and good branding can make for a successful business.
John also indirectly mentions the importance of putting some of your own money on the line in his book Display of Power when he is talking about how difficult it was for him to get initial funding for FUBU.  He was $30,000 in debt and had no more money to contribute, so banks kept turning him down (John, 2007).  It only makes sense that if you are in debt and have nothing to contribute to you business venture, it looks bad to potential investors.  It not only makes them afraid that you cannot budget money effectively, but it also makes them think that you must not believe in your company enough to risk your own money.  Lesson learned: make sure to contribute to the funding of your business and add investments by principal that you have into your financial forecasts and assumptions.
According to John, one of the biggest pitfalls of a Business Plan is to overestimate the company’s present value (Wang, 2009).  This is especially problematic if you are seeking funding from an angel investor.  Too many times do pitchmen and women walk away from a deal on Shark Tank because they think their business is worth more than it really is, and they don’t not want to give up the equity required to get the funding that they need.
John’s emphasis on branding taught me that if you want to succeed in any business these days, you have to make people think of your product or service first.  He also mentions that you should look at yourself as being part of your brand. 
Three of the first questions that all of the “Sharks” ask when entrepreneurs come on the show are: “What makes your product or service different,” “How much profit has it made so far,” and “Why is your company worth what you say it is?”  Corcoran and John have both asked these questions numerous times.  It is important to answer all of these questions in your Business Plan, and it is even more important to be honest about them.  According to John, some investments that look like they are set in stone on the show never happen because the data that is presented to the panel is skewed.

Kevin O’Leary is most famous for his role on the ABC television show Shark Tank, a reality television show that puts business owners and entrepreneurs up against a panel of experienced and highly successful venture capitalists and businesspeople. O’Leary created and made successful SoftKey Software Products, an educational software company that was eventually sold to Mattel for $3.7 Billion.
     Kevin O’Leary counteracts David Gumpert’s opinion. “It's clear in how they described their business plan that they are the right people to execute their plan” (O’Leary, 2010). He states the importance of having the right people for the right job. O’Leary continues to say, “If you look at the strengths or the attributes of those that are successful there are three things; one is that they are able to articulate their vision in a very short period of time.” (O’Leary, 2010) Cohesion between the plan and the person is imperative to communicating the concept quickly and accurately, especially when seeking funding.
The experts seem to encourage a sense of optimism within realism. Being positive and having the correct attitude has more influence on investors then the actual written document.
O’Leary links several problems into one: overvalue a product and not having the right people for the product.



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