Entrepreneurial Advisor

I Have a Business Plan – Now What?

Entrepreneurs all hear that in order to attract financing they must have a business plan. Most small business assistance organizations, whether they be SBDCs, entrepreneurial centers or accelerators are well equipped to assist the small business person with the preparation of a business plan, including requisite market research and financial projections. Sometimes, but not often these plans include a well developed marketing and sales plan that anticipates channels of distribution, a reasonable estimate of the sales cycle and the cost of sales.

The entrepreneur now has a product, a management team, business plan and a fifteen minute power point presentation. All that’s left is raising money, right? Wrong! One must execute on the business plan! This requires strategies, tactics and the ability to implement them. I have seen so many well written business plans and well executed investor presentations that just cannot hold up under further due diligence. One thing that we have done at Hopewell Ventures, where I was a partner, is to require a 100 day or longer Action Plan in the term sheet as a condition of funding. In other words, what will you do the first week and what will you do in the sixteenth week after you receive significant capital? This should not be necessary. This kind of discipline should already be in place but it usually is missing.

I have gone into companies that have had $2 million-$5 million in annual sales but have no idea how much those sales cost or are shipping product from China because it is cheaper but need to pay extra transportation costs and warehouse costs because they can’t anticipate when sales will close. I have talked with management of businesses that believe being entrepreneurial means having no written policies in place. Execution risk is the biggest risk most venture capitalists face. This is why the management team is so important but so often execution is still lacking.

Some of this implementation planning should be part of the business planning process but is not, other pieces can only be developed after a plan is put in place. Many times management, especially in start-up companies has no idea what to do first second and third. Business assistance organizations either do not have the resources and/or do not have the expertise to take a business to this next level of assistance. All too often these businesses do receive financing and waste much of that money before they understand what is wrong. If your business is getting in the door to make presentations at Venture Capital or Angel Funds but is being turned down at the next level it probably is not your business plan. You might need to take your business planning to the next level.

I believe that this inherent weakness in entrepreneurial development is especially severe in places where relatively little entrepreneurial culture exists. A large pool of management expertise is lacking and less experienced management is less likely to understand this level of planning and implementation. Business assistance providers, entrepreneurs, angel and venture investors in these regions must be able to identify this problem and be willing to address it with additional resources either at the public/non-profit agency level or by retaining private expertise in this area.