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How to create an investor-ready business plan

A business plan allows you to detail a strategic operating plan, define and execute your value to customers and verses others in the market, and develop a robust financial model that details what you need to accomplish in order to meet your projections. This is an extremely valuable process to go through and document to have.

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When I am introduced to an early-stage company – either to explore helping them as an advisor or as an investor – if I like the initial discussion, I ask for a formal business plan as follow up. Far too often I am then sent a PowerPoint presentation. The PPT is colorful, packed with infographics and does help illustrate the industry and the opportunity. But it is NOT a business plan.

As discussed in last week’s column, the first step to creating a business plan is to develop an executive summary. If you hope to grow your business, raise capital and/or hire partners and employees in the future, you’ll also want to take Step 2: creating a formal business plan.

A business plan allows you to detail a strategic operating plan, define and execute your value to customers and verses others in the market, and develop a robust financial model that details what you need to accomplish in order to meet your projections. This is an extremely valuable process to go through and document to have. You will find that a business plan is an invaluable tool if you want to bring on a business partner or get in sync with existing partners or employees, and if you ever want to raise money it will likely be required by a potential investor or for bank loan.

I believe the sections introduced below are the most valuable topics to cover in a business plan. Some may be more relevant to you specifically, and others not as much, so use this as a guide rather than a golden rule.

Cover Page and Table of Contents: It may seem simple, but these are important. The cover page should make it clear what the plan will discuss. The table of contents will allow anyone reading the plan to skip ahead to the sections most important to them.

Executive Summary: Your previously developed executive summary should lead off the business plan.

General Company Description: Discuss how the business was born, the current state of operations and where you want to go.

Objectives & Exit: What are your “end game” goals? Do you want to save enough money to retire? How about sell the business to a larger competitor? Pass along the business to your children or a protégé? It is important to honestly define what you want the outcome to be so that you can tailor the rest of your plan towards these ends. It is also important to set expectations for those working with you.

Management: Provide a detailed biography for all the key leaders involved (even if it is just you) and discuss how prior experience and success will help achieve current goals. You should also discuss any leadership positions that will need to be hired for as your business (and the plan) matures.

Product & Service Description: Provide details on what you provide to your customers. You should prioritize the most important revenue streams first, but all should be mentioned. You should also talk about how and how much you get paid for each product you sell or service you provide.

Market Analysis: This section should provide a detailed description about your specific market. Include objective details like total market size, growth trends and customer behavior statistics. You should also provide subjective analysis on where you fit in and where customer behavior is headed. This section should also detail your competition. You may also want to do a SWOT analysis for the company here (Strengths – Weaknesses – Opportunities – Threats).

Marketing Strategy: Detail your strategy to acquire and retain customers, and to provide an exceptional customer experience. Include overall goals as well as specific and tangible strategies like online advertising, public relations and original content creation.

Investment Opportunity: This section is only relevant if you need to raise money to fund your business, but this includes both external money (i.e. bank, venture capital or angel investor) and internal money (i.e. your savings or family/friends money). Detail how much money you need, the premium that an “investor” will get for providing this money and how/when it will be paid pack. Even if it’s your personal money, you want to make sure you have a solid plan and a strong return on investment.

Financials: This is a vital component of every business plan, and as such it needs it’s own column. This will also be covered in the near future. Even if you only develop an executive summary and don’t do the full business plan – make sure you develop detailed financials. You need to build a sophisticated model that discusses all your revenue and costs. You should not work backwards from your financial goals to build this model – that is a common and big mistake. You need to start with realistic business assumptions that match up to your plan and then work towards determining accurate final projections.

As with your executive summary, the process of creating this document is as important as the document itself. Once complete your business plan is a detailed capsulation of everything about you and your business. You can use it to recruit employees, add strategic partners in peripheral industries and raise money. Do not ignore its value for you personally (and your management team) though. Make sure your efforts are in line with the strategy you have mapped out.

If market conditions change, then your plan likely has to change too. Finally, your financial model and projections should be used as an important management tool. If your assumptions prove to be off, correct them and project how this will affect your business. If done well, this plan and your financial model will help you optimize your business and avoid problems as you grow. It will be your roadmap to success.

Hoyt David Morgan is an entrepreneur, angel investor and business strategy leader. He is an investor and/or adviser to a handful of exciting and high growth companies, and has been a part of several high-value exits. He is passionate about customer experience, smart business and helping innovative companies grow... and sailing.

Business Entrepreneur

Here’s why you shouldn’t start a startup

(BUSINESS ENTREPRENEUR) Building your own startup and being your own boss sounds tempting, but be sure you make these considerations before starting out.

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Man at a whiteboard outlining his startup plan.

2020, a year for our generation that will most likely be marked in infamy for decades to come. At least I hope that this is the bottom of the barrel, because if there’s even further to go… Those fallout shelters are starting to look homey.

A lot of people, myself included, are looking for different options for new careers. Maybe it’s time to place some faith in those back-burner dreams that no one ever really thought would come to fruition. But there are some things about starting up a new business that we should all really keep in mind.

While you can find any number of lists to help you to get things going, here’s a short list that makes beginning a new business venture a monumental effort:

  • You need to have a unique idea with an impeccable execution. Ideas are a dime a dozen. But even the goods ones need the right business-minded person behind it to get things going for them.
  • Time, time, and more time. To get a startup to a point where it is sustainable and giving you back something that is worthwhile, takes years. Each of those years will take many decisions that you can only hope will pan out. There is no quick cash except for a lottery and you have to be extra lucky for those to get you anything. This whole idea will take years of your life away and it may end in failure no matter what you do.
  • You have to have the stamina. Most data will show you that startups fail 90% of the time. The majority of those are because people gave up on the idea. You have to push and keep pushing or you’ll never get there yourself. Losing determination is the death of any business venture.
  • Risk is a lifestyle. To get anywhere in life you have to risk something. Starting a business is all about risking your time and maybe your money to get a new life set up. If you can’t take risks for the future then you can’t move up in the business world.
  • Bad timing and/or a bad market. If you don’t have a sense for the market around you, which takes time and experience (or a lot of luck), you won’t make it. A keen business sense is absolutely necessary for you to succeed in a startup. Take some time and truly analyze yourself and your idea before trying something.
  • Adaptability is also a necessity. The business world can be changed at the drop of a hat, with absolutely no warning. Rolling with the punches is something you have to do or every little change is going to emotionally take a toll on you.
  • Lastly, not all of this depends upon your actions. If you start something that relies on investors, you’re likely going to get told “no” so many times that you’ll feel like it’s on repeat. Not everything is dependent upon your beliefs and whims. You need to be able to adjust to this and get people to see things from your point of view as well. But ultimately, it’s not all about you, it’s also about them.

These are just a few ways that starting a startup could stress you out. So, while the future could be bright, stay cautious and think twice before making any life changing decisions.

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Business Entrepreneur

Restaurants: Going digital is simple with these tools

(BUSINESS ENTREPRENEUR) In 2020, restaurants going digital is critical. Luckily, it’s also easy, safe, and may even save you money.

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Restaurants prepares delivery or to-go food for safety

So, you own or manage a restaurant and you have yet to “digitize” your menu for COVID-era safe ordering? No problem! Transitioning your menu and service to the virtual realm has never been easier. There are a ton of options for restaurants to choose from to keep your customers feeling at-ease, your front-of-house staff happy, and the whole service experience streamlined for all parties involved.

A free app with over 500 restaurant partners and 5k+ active users, AAHI is a user-friendly platform that uses QR codes to share menus and NFC for contactless payments. AAHI boasts a 25% order increase for participating restaurants and who can say no to that, especially during these tough times. Additionally, you’ll be cutting down on operational costs by around 30% (better tech equals less need for servers!), and your laid-off staff will be able to collect unemployment if they need to.

Another free (up to 200 views a month) app with an emphasis on curbside pick-up is Orderlina. Customers scan a QR code, which takes them to the same menu they would see if they were going to eat in, making it an integrated experience. A bonus is that the app links your menu to your social channels. I always say, free marketing is never a bad thing! Plus, you’ll be more likely to gain followers and receive micro-content from satisfied customers. Win-win!

Especially with winter right around the corner and outdoor seating becoming an increasingly limited option (especially depending on where you live), everyone in the industry is eventually going to have to make the shift to digital – the question is when. Physical menus have become a thing of the past. Not only are they potential vessels for spreading COVID-19, but if you are using disposable paper ones, you’re undoubtedly creating unneeded waste. Same goes for the exchange of cash, or card payments that require contact. Good riddance!

The common goal across the entire industry right now is to stay open and bring in capital in whatever capacity possible, while also maintaining a healthy staff and a pleasurable, safe experience for patrons. That’s going to require some adjustment and creativity compared to service pre-COVID. By converting to digital, you are putting your best foot forward into the uncertain future for the restaurant industry.

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Business Entrepreneur

Scientifically check your risk for burnout with this free quiz

(BUSINESS ENTREPRENEUR) This new tool lets you take a free self-assessed, science-based burnout test to give you an idea of how much self-care you need.

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Woman with face on table suffering burnout in front of computer.

Concerns of keeping self-care and mental health in a positive spot – specifically in relation to burnout – have been a hot topic of discussion. While COVID-19 has exacerbated these concerns and stress levels, the issue of burnout has been around for quite some time.

Work burnout is often discussed within terms of work-life balance. Simple ways to avoid that crash are enforcing a hard stop on reading or responding to emails at a certain time of evening, or to continuously clean your workspace. Easier said than done, but it is critical.

But sometimes you have to look at the nitty gritty. Sometimes you have to ask difficult questions about your job and your personality in order to understand how burnout is impacting you. This can now be done with Global IT Burnout Index, a free, science-based assessment to tackle your stressors before it’s too late.

This is geared towards people working in tech (as the website reads, “burnout in tech is high and real”), but is useful for any industry.

To begin, you simply start the quiz and answer a few questions about yourself and your job (e.g. “I find it difficult to relax after a day of work” and then you answer based on how strongly you agree or disagree).

There are 10 total questions, and no personal information is asked (no name or email). It is open data, meaning it will help people on the other side better understand burnout; but, it’s totally anonymous.

The quiz takes no longer than 2 minutes. At the end, it will give you a number out of 6 measuring your burnout rate. The higher the number, the more likely you are to experience burnout.

Burnout has the ability to manifest physically and mentally, and can take a toll on your body and mind. Knowing if you’re experiencing high amounts of activity that can lead to burnout can help you know if you need to take precautions to change things in your life or job.

For those of us working from home, the situation is a Catch-22. You aren’t currently forced into a stressful commute. But it’s harder to pull yourself away when 5pm (or whatever your end time is) rolls around.

For people in the office or on site, it’s the same thing. You get to socialize (safely, obvi) with your coworkers, but there’s those on-site pressures.

No situation is perfect, but understanding if you’re in a situation where you could use a change or some help is incredibly important – especially these days.

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