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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

Why many entrepreneurs facing mental health issues don’t get help [part two]

(BUSINESS NEWS) It isn’t a financial issue or a refusal to admit a problem – here’s why many entrepreneurs struggle with mental health challenges and never seek help.

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Nearly 44 million adults experience an episode of mental illness in any given year according to the National Alliance on Mental Illness (NAMI). Of these, the experience of 10 million adults in the United States with mental illness was so serious that it substantially interfered with a major life activity.

A significantly higher percentage of entrepreneurs studied showed signs of mental illness than did the general population according to research conducted at the University of California in 2015.

Only 41 percent of adults who needed them received mental health services in the past year. What prevents us from getting the assistance that we so desperately need?

>>Click here to catch Part One of this series<<

Although a common problem among us, mental illness in America, in all its forms, is still marked by stigma and shame. This spurious perception of a shameless disorder has been partly responsible for individuals not getting the help they need.

“It’s much more difficult to think about an anxiety disorder or obsessive compulsive disorder helping a person excel in business,” said Claudia Kalb, author of Andy Warhol was a Hoarder: Inside the Minds of History’s Great Personalities, speaking to the Harvard Business Journal.

“Stigma stems from not understanding what mental health conditions are all about, and not realizing that we all have at least some of these characteristics, “ said Kalb. “Part of the reason to learn more about these conditions is not to label people, but to better understand where people are coming from — and how, in a business setting, some of these attributes can be positive.”

While it’s very tempting to stay afraid of the stigma of a diagnosis, understand that you’re not alone, and that we all share similar problems from time to time.

With the passage of the Affordable Care Act, Americans hoped access to personal healthcare insurance would be both easier to obtain and less costly. The U.S. Small Business Administration reported in 2014 that over 75 percent of businesses are known as “non-employer” firms. These firms create a single job — typically the business owner — and have no one else on the payroll.

Because of the changes in insurance laws, many of these individuals were faced with having to leave health care options that they many have had under prior insurers and face higher rates on the new healthcare exchanges for insurance plans that were less comprehensive.

Premiums for some insured have risen nearly 10 percent in the past two years, and depending upon the state in which they live and income targets, many individuals are bracing for steep increases in insurance prices this year, with estimates ranging from 16 percent to 65 percent increases.

As the publisher of the Washington Post, Newsweek, and owner of multiple television and radio stations, Phil Graham was a man with money and power. Yet, despite his wealth and privilege, he was not immune to mental illness. His journey with severe mental illness began in 1957 and continued for years thereafter.

Katherine Graham never forgot her husband’s tears, even decades later. “He was in real tears and desperation,” she told The Baltimore Sun, “he was…powerless, immobilized.”

In an era in which the stigma was profound and the treatment options severely limited, there was little help that could be found, and Phil’s rapid descent into illness included hospitalization and invasive electroshock therapy, all to no avail. Throughout it all, Katherine carried out the doctor’s orders, trying to talk Phil out of manic depressive episodes, speaking for hours on end to try to bolster his spirits.

We know that we ask our loved ones to carry large burdens for us an entrepreneurs, and try to ease their load. Yet, by not looking for help in an attempt to not be a bother to them, we don’t help them.

A study by Rogers, Stafford, and Garland at Baylor University found that for family members of those with mental illness, there were high levels of both subjective and objective burdens reported, with many family members struggling to process through their own feelings about the mental illness and their loved one.

We do not ease the path for our loved ones by refusing to seek and get the help we need, but instead damn them with a heavier burden, despite our well-meaning intentions.

In her powerful work, The Dangers of Willful Blindness, Margaret Heffernan, discusses the all-too-familiar concept of people not wanting to allow themselves to think about things that end in conflict or that rock the boat, personally or professionally.

“We can’t notice and know everything: the cognitive limits of our brain simply won’t let us. That means we have to filter or edit what we take in. So what we choose to let through and to leave out is crucial,” writes Heffernan. “We mostly admit the information that makes us feel great about ourselves, while conveniently filtering whatever unsettles our fragile egos and most vital beliefs.”

For many of us, it’s not that we don’t want to admit that we need help, but rather that we simply cannot allow ourselves to see it — even in the best of times! If you’re struggling to see life clearly through the lens of a mental illness, it is even more difficult.

Being open with one’s self about things that are real and things that are not, and acknowledging that things might not be okay, is the first step to finding assistance.

You don’t have to find help all alone. Reaching out to someone for help can often be uncomfortable, especially about a topic that is as personal as your own health, but doing so is the critical step towards recovery. Find a trustworthy partner for your recovery who you trust to help you find someone who can provide the level of assistance you need.

While your healthcare provider is the best first stop to discuss things that are going on with you physically or emotionally, it’s important to have a support network who can be there for you in between doctor visits.

There are other, more immediate resources for those who need them:

The National Suicide Prevention Lifeline is available 24/7 either by calling 1-800-273-8255 or by going to their website and engaging in an online chat.

For those who prefer texting options with qualified crisis counselors, the Crisis Text Line is available 24/7 by texting “Go” to 741741. Both options are confidential and are immediate supports for you and your family.

Once you’ve begun treatment or counseling, stay educated and informed about the challenges that you face. You share control of your pathway to recovery with your doctor or counselor; find out all that you can from reputable sources about the specific challenge you face, and stay involved in making informed treatment decisions about your care.

You’re the most important thing in the world to your family, not your business, not your perceived notions of success — you. If you take away nothing else from this article, know that. You are not alone, and professional help is available.

>>Click here to catch Part One of this series<<

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Business Entrepreneur

Entrepreneurs face higher rates of mental illness [part one]

(ENTREPRENEUR NEWS) For many entrepreneurs, carrying out the work that they feel that they were meant to do comes with the cost of psychological turmoil, a cost often left unchecked.

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From the outside looking in, the entrepreneur’s calling is charming and magical. Being one’s own boss, making the decisions, and doing what one loves makes many people who work for someone other than themselves a tad jealous. For all your neighbor’s reveries about how the entrepreneurial life is a series of unbridled successes, you well know the price you pay, including those that no one else ever sees or hears about.

For many entrepreneurs, carrying out the work that they feel that they were meant to do comes with the cost of psychological turmoil, a cost often left unchecked.

As an entrepreneur, you balance the responsibility for the health and welfare of your company with the need to preserve your own health. There are pressures to maintain a public façade for the perceived benefit of your brand that may well be at odds with what’s going on in the inside.

Being artificially strong and denying yourself the help that you need isn’t only harmful physically, but fiscally as well. Businesses in America lose $193.2 billion in lost earnings annually due to the effects of serious mental illness on employee production and associated costs.

A significantly higher percentage of entrepreneurs studied showed signs of mental illness than the general population, according to research conducted at the University of California in 2015. The authors contended that there may be a link between mental illness and creativity.

The expanded creativity of many entrepreneurs is a fantastic attribute, but also one of a host of characteristics that affect their mental well-being. One of the authors of the study, Michael A. Freeman, identified the link and called for further research. “People who are on the energetic, motivated, and creative side are both more likely to be entrepreneurial and more likely to have strong emotional states,” stated Freeman, speaking to Google.

Amy Morin, psychotherapist and author of 13 Things Mentally Strong People Don’t Do, identified four common mental health issues that many entrepreneurs face based on the nature of their work: depression, anxiety, self-worth issues, and addiction.

Working long hours, alone for many of them, can drive entrepreneurs to be less mindful of their health. That isolation can lead some towards increased risks for depression, as well as the mindset that “time is money.”

We’re written before about the dangers of such a mindset, and maintaining it costs the entrepreneur much needed leisure and decompression time.

The pressure you feel can be healthy, a motivator to continue your efforts and network with others who can help you succeed. However, it can also be linked to extreme anxiety, which can manifest itself in multiple ways, including being so afraid to make a business decision that it leads to mental paralysis.

This incapacitating anxiousness can also lead to burnout. “It’s much more difficult to think about an anxiety disorder or obsessive compulsive disorder helping a person excel in business,” said Claudia Kalb, author of Andy Warhol was a Hoarder: Inside the Minds of History’s Great Personalities, speaking to the Harvard Business Journal.

She notes, “Howard Hughes… was a successful entrepreneur, but in the latter part of his life, as his OCD characteristics became worse, he became totally isolated. He couldn’t interact with people in business or in society.”

Anxiety’s effects can be compounded by how you judge your own self-worth.

For many, your job is your identity, and your bank account a quick barometer of your importance.

In an era in which it’s no longer uncommon to have startups fail to launch or succeed for awhile before not pivoting in a market shift, failure to make your business thrive shouldn’t have the stigma that it once did.

Some of us are feedback junkies, seeking engagement with and feedback from our internal and external customers. For others, it’s the excitement of the design and launch that gets us motivated. Whatever your particular cue might be, for the serial entrepreneur, the rush that you get is palpable and you wouldn’t trade it for anything. Maybe you should, though.

There’s a fine line between persistence and obsession, and a finer line still between obsession and addiction. Morin cites a 2014 study, published in The Journal of Business Venturing, that found that the actions of serial entrepreneurs shared similar characteristics with behavioral addictions.

These characteristics included having obsessive thoughts, negative emotional outcomes, and withdrawal-engagement cycles, in which the entrepreneur withdraws and yet feels pressured by the need to reengage with his business or partners, which he does, only leading to increased frustration and resentment. The inability for the entrepreneur to understand when their behavior was potentially damaging to themselves was also noted, with a “pursue at all costs” mentality being common, despite the harm done.

The need for mental health supports knows no class boundaries, no race or gender, or age limitations. Nor does it differentiate between those with the entrepreneurial spirit and those without.

Having an issue with your mental health or maintaining your emotional equilibrium doesn’t make you weak. The work that you’ve chosen sometimes comes with hidden pitfalls that can cause a human cost; as your most important asset, be proactive in maintaining it.

You’re the most important thing in the world to your family – not your business, not your perceived notions of success — you.

If this is a fight that you currently face, or fight on the behalf of someone close to you who suffers from a mental illness, know that you are not alone.

If you take away nothing else from this article, know that. You are not alone, and professional help is available.

You don’t have to find help all alone. Reaching out to someone for help can often be uncomfortable, especially about a topic that is as personal as your own health, but doing so is the critical step towards recovery. Find a trustworthy partner for your recovery who you trust to help you find someone who can provide the level of assistance you need.

While your healthcare provider is the best first stop to discuss things that are going on with you physically or emotionally, it’s important to have a support network who can be there for you in between doctor visits.

There are other, more immediate resources for those who need them:

The National Suicide Prevention Lifeline is available 24/7 either by calling 1-800-273-8255 or by going to their website at http://suicidepreventionlifeline.org/ and engaging in an online chat.

For those who prefer texting options with qualified crisis counselors, the Crisis Text Line is available 24/7 by texting “Go” to 741741.

Both options are confidential and are immediate supports for you and your family.

Once you’ve begun treatment or counseling, stay educated and informed about the challenges that you face. You share control of your pathway to recovery with your doctor or counselor; find out all that you can from reputable sources about the specific challenge you face, and stay involved in making informed treatment decisions about your care.

You’re the most important thing in the world to your family, not your business, not your perceived notions of success — you. If you take away nothing else from this article, know that. You are not alone, and professional help is available.

>>Keep reading as Part 2 digs in even deeper…<<

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Business Entrepreneur

Startups love pondering inclusion, yet half have no women in leadership

(STARTUPS) Tech startups are a huge part of discussing diversity and inclusion, but something as simple as hiring women in management somehow remains elusive.

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According to the Silicon Valley Bank’s annual report, over half of startups have no women on their leadership team. None.

As hard as this fact is to believe, it is also hardly breaking news. Organizations who have surveyed startups and technology companies for the past several years have seen that long-standing trends that disadvantage women and other genders in the tech space are still at play.

Like many other gendered debates about the treatment of women and other minority workers, this problem is seemingly a Catch 22 or a chicken and egg situation. Critics will continue to argue that the reason ladies aren’t in leadership roles is because they don’t have innate leadership qualities or that once their non-male employees have proven themselves, then they will start getting the resources and promotions that they say that they desire.

Like many other myths about women in the workforce, these beliefs only serve to reinforce the status quo by transferring the responsibility for these frustrating conditions onto the marginalized party.

These beliefs are busted not only because they’re tired gender clichés, but because we have hard data that proves the financial and cultural benefit in long-term effects of women leadership in tech.

However, for all the discussion of diversity initiatives, the likelihood of traditional funding going to women-led startups is still small.

For now, startups with women in leadership roles were more likely to get their funding from investing teams that were also led by females. Wouldn’t it be great if other investors began to not only understand that in 2019 it’s imperative that a company’s leadership reflect the diversity of the employees that comprise it? That workers will be more motivated, feel more understood, and have greater buy-in when they identify with their management?

Empowering women is how more get involved in tech. Diversity of leadership helps organizations thrive. And if something as simple as binary gender diversity is such a tremendous challenge, all other diversity issues are still (unfortunately) a large mountain to climb.

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