[skatewhale]

What do you guys think? A business plan for potential investors, Should I get into every possible detail I can think of in the business plan? LIke how every little part of my company's website should be laid out and what kind of order systems it will have? Will I bore the investors out?

Or should I just put a general idea down on the paper? Leave the small parts to discuss with interested investors?

I am trying to apply for a goverment funding program for entrepreneur. I only get one try with them, so would a very specific business plan be more attractive?

Thanks for any advice!

[akula]

ok....

if applying for government programs, they will have their own guidelines, so you'll just need to follow the stated rules.

with private investors, there are two principles to follow:

1) The volume of the biz plan is directly proportional to how well you know the investor. If you're total strangers, don't worry about pitching them. It's a waste of time. Most investors have a rule for never doing business with strangers. This happens because of complicated reasons. If you've been introduced to each other through a mutual friend - the initial plan is 1 page maximum. If you're friends already, something scribbled on the back of a napkin is quite sufficient.

2) Biz plans are pitched in stages. The point of the 1 page exec summ is to get you a second meeting. Repeat, the point of the 1 page summary is to get you a second meeting - not to close the deal. Your goal now is to get a second meeting, not to have your plan read.

Do you get it? Don't overwhelm the person you are pitching. Send them a three paragraph summary written using Allen Morgan's rules for how to pitch investors, include a graph/chart, create suspense (i.e. include a written endorsement / media articles) and get that 2nd meeting.

From there on, the investors will tell you what they expect.

DO NOT WRITE YOUR 30 PAGE ODE TO WISHFUL THINKING, BECAUSE THERE ISN'T AN INVESTOR IN THE WORLD WHO'LL READ IT. JUST FOLLOW ALLEN MORGAN'S RULES.

There are 10 rules at http://allensblog.typepad.com/allens...mmandment.html

Read them, and you'll know the answers to your question. Particularly, read #3

David Cowan also covers these issues.

[skatewhale]

Wow, thanks akula for all the great info. it's been a big help! I was thinking of submitting a 30 pages business plan. I'll try to KISS it (keep it simple and smart) Thanks!

[akula]

good.

get introductions, don't overwhelm, peak ppl's interest and you'll do fine.

...and always remember the golden rule of capital seekers: If you ask for advice, you may get capital. If you ask for capital, you will at best get advice. You've gotta understand how this stuff works. You're doing a startup. You're on a journey. You need to make a lot of friends now. Some of them may help you this time. Most won't. But if you make these contacts now, you'll have friends when you do your next startup.

Does that make sense? It's not your current startup you gotta worry about. It's your next one. So everyone's valuable, even if right now, they don't offer much more than advice.

[akula]

sidenote: for those of you interested in using a biz plan to recruit investors.

in private equity circles, no one cares about your business plan because that's not what the investor invests in.

this is called the horse vs. jockey debate

in other words, an investor has to make a decision; do I bet on the entrepreneur (jockey), or do I bet on the market opportunity (horse)?

what do you think is more important?

at any rate, the majority of investors bet on the jockey, so the contents of your business plan are less important that the contents of your resume.

for more info see Matthew McCall's post. He's the Managing Director of Draper Fisher Jurvetson Portage Venture Partners.

[jwargo]

Your business plan is only a sales tool to communicate your idea. The most important part is the Executive Summary. If you don't capture their attention in the first 5 to 15 seconds in the ES your reader will throw it away like changing channels on a TV remote control.

Best wishes,

Joseph Wargo, Certified Specialist in Management Consulting
email: jwargo@busbuilders.com
tel: 512-567-3143