The plan should be formula-driven and fluid, not a static estimate. Your projections and your plans of attack must be committed to but must also
demonstrate room for flexibility. More than likely, an investor reviewing the plan will cut the sales projections and raise the costs. The plan should be prepared to handle these types of contingencies as well as flexible enough to cope in dire situations. Building a fluid set of plans and decision criteria will take longer but it will pay off in the end to have multiple levels of projections formalized in the plan.
Before you solicit financing, an important first step is to analyze the business thoroughly and prepare yourself for the fierce competitiveness of the capital markets. Keep in mind that it is not just the numbers that matter, you should be able to make transparent your venture’s source of value.
1) What core competencies and values will the business possess?
2) What need does the venture fill?
3) What is the company’s basic value proposition?
Help from Outside Professionals
Lawyers, accountants, marketing professionals, IT specialists, scientists, and engineers can provide valuable input for emerging companies.
For example, attorneys can:
n Check patent, copyright, trademark or trade secret protection.
n Review proposed arrangements or contracts for both short- and long-term benefits.
n Consult on product liability, antitrust and environmental concerns.
n Address the myriad of legal pitfalls facing every new or expanding business.
Experienced accountants can:
n Help you develop a realistic business plan.
n Review financial projections for the plan.
n Recommend information and computer systems technology.
n Provide tax planning, as well as state and local tax consulting.
n Create the proper corporate structure from the beginning.
Lawyers and accountants can offer knowledge of and contacts with venture capital firms, banks, other lending sources and underwriters as
well as advice on how to structure the venture. Outside marketing professionals can develop a comprehensive market analysis for inclusion in the business plans. Their research can determine:
n The size of the market and the company’s market share.
n Growth potential for the industry and the company.
n Competitive forces and new product development.
n Market acceptance of a proposed new product.
n Creative marketing approaches.
In addition, outside IT and engineering expertise may be needed to perform research and development and determine the technical feasibility
of new systems and products. You may also need consultants to help you with real estate, office design, inventory, logistics, production, etc.
Consulting with outside professionals can diminish the need for high salaried in-house executives in the company’s early years, and give you
insights to enhance the probability of success.
Business incubators are a good source for providing these services or recommending resources. Incubators affiliated with universities may
provide access to laboratories, specialized equipment and research experts. Many “virtual” incubators provide these services through the
Internet. Consult the National Business Incubator Association for more information.
NOTE: While seeking consultants’ help in developing a business plan is important, the need for active management involvement in every aspect of the planning process is paramount. A business plan prepared principally by outside consultants will not reflect an entrepreneur’s total insight and broad concept of the business. The entrepreneur must take full ownership of the plan.