As I’m reviewing business plans from college grads I’m mentoring (as an alumnae mentor at Brown Univ ) and from Glengary , the VC firm I’m a partner in, this whole business plan process is getting to me. So much of what I see in biz plans is, pardon the phrase, BS. We all know none of us believe any of the numbers is the proformas, the market growth, etc., so why do we bother with all this stuff when we know it’s a joke? I don’t know, but here’s what I’d like to see in a biz plan for a change.
- The current, accurate, real, truthful view of the world – market(s) as it exists and will exist. If it doesn’t yet, why, what are the real needs, current and potential competitors (in/out of your market space). What have others tried and what has succeeded or failed and why. Tell me a TRUE story of the world you’re going into – you can use spreadsheets, analysis, etc…you should give me #’s, but tell me how this world really works, not how you’d like it to work.
- Clearly state your assumptions and hypotheses (e.g., if we do x, then y will happen; we can make A with $X in T months, we will take C to market and the market will do S) – how will these impact the market you’re going after or creating – and ideally, do it in a way that you can change the assumptions so they automatically change the outcome.
- Delineate your plan ‘management/mitigation’ story – since we know you’ll make mistakes in #2 above, what are you going to do when this happens? This has 3 critical areas: 1) how flexible is your management – can you adapt and shift if necessary? 2) how flexible is your product or service? Can it adapt or is it a binary choice? 3) if things really don’t happen as planned, are you done? Do you have other ways to go to market?
- People – you need the required resumes of course, but what matters more is their level of passion, commitment, heart/soul into the biz, attitude, abilities, history of executing, of doing, of making things happen.
- Money – how much do you need, what are you going to do with it, cash flow, P&L, balance sheets, margins, exits etc. – the usual stuff. But, what are you doing while you’re waiting for the money – are you still moving ahead? Are you able to straddle ramping up based upon funds? Investors want to see that you can still make progress while you’re waiting for funding or if you don’t get enough.
Deb, founder of Mills-Scofield LLC, is an innovator, entrepreneur and non-traditional strategist with 20 years experience in industries ranging from the Internet to Manufacturing with multinationals to start ups. She is also a partner at Glengary LLC, a Venture Capital Firm.