Comments on: How much planning is for you? http://www.smallbusinessboomers.com/26/ business advice for boomers Tue, 26 Jan 2010 00:05:44 +0000 http://wordpress.org/?v=2.9.1 hourly 1 By: Jim Lane http://www.smallbusinessboomers.com/26/comment-page-1/#comment-12 Jim Lane Sun, 14 Jan 2007 06:44:16 +0000 http://smallbusinessboomers.com/26/#comment-12 Years ago, I asked several venture capitalists about which elements they found most important in a business plan and their answer was "is there a market." The numbers told them you had looked into all the nooks and crannies, but that they were largely of no paarticular value because, by the time the VC firm had ramped up and gotten into the effort, all the numbers will have changed. I've found the same thing to be true.  Jim   Years ago, I asked several venture capitalists about which elements they found most important in a business plan and their answer was “is there a market.” The numbers told them you had looked into all the nooks and crannies, but that they were largely of no paarticular value because, by the time the VC firm had ramped up and gotten into the effort, all the numbers will have changed.

I’ve found the same thing to be true.

 Jim

 

]]> By: Greg Balanko-Dickson http://www.smallbusinessboomers.com/26/comment-page-1/#comment-17 Greg Balanko-Dickson Sat, 13 Jan 2007 03:51:46 +0000 http://smallbusinessboomers.com/26/#comment-17 Hi Jim: I agree and disagree with you on this one. The "people" side of any business especially the startup and its founders are crucial. That said, there are many ways to do a business plan, it does not and should not be 50-100 pages. 10 pages is plenty and maybe 20 with financials. (Disclosure: I have authored a book on business planning) You make a great point about understanding your market and your numbers. VC's and investors want succinct information when trying to assess an investment opportunity. Often shorter is better whether a Power Point or a well written summary. In researching my book and in reviewing U.S. and Canadian studies of business failures, I found that bankrupt and successful firms had similar business plans and financial plans. The major difference between success and failure was that 81 percent of successful firms periodically took stock of where they stood with respect to their goals, and they followed up by making adjustments to their practices and expectations. The sad news is that less than 33 percent of bankrupt firms with financial forecasts in their business plans actually compared their results with their forecasts, and only 40 percent of those took any remedial action when their forecasts differed from their goals. (Source: Failing Concerns: Business Bankruptcy in Canada, Characteristics of Business Owners 1992 by U.S. Department of Commerce) Plus, if an entrepreneur chooses to go the bank route, most bankers will ask for a business plan.   <div>Greg,</div> <div /> <div>Thanks for your comments. </div> <div /> <div>I've found that financial sources who require financials don't have any idea what the details mean.  Picking a financial backer who brings more to your business than money is key.  My experience has been that if you find people who understand the business they already know if your approach makes sense. </div> <div /> <div>Financial projections are a best guess.  One highly successful investment banker once told me that if I could halve my revenue and double my costs and still be happy that would be good.  He didn't give me any money.</div> <div /> <div>Jim</div> Hi Jim: I agree and disagree with you on this one.

The “people” side of any business especially the startup and its founders are crucial. That said, there are many ways to do a business plan, it does not and should not be 50-100 pages. 10 pages is plenty and maybe 20 with financials.

(Disclosure: I have authored a book on business planning)

You make a great point about understanding your market and your numbers.

VC’s and investors want succinct information when trying to assess an investment opportunity. Often shorter is better whether a Power Point or a well written summary.

In researching my book and in reviewing U.S. and Canadian studies of business failures, I found that bankrupt and successful firms had similar business plans and financial plans.

The major difference between success and failure was that 81 percent of successful firms periodically took stock of where they stood with respect to their goals, and they followed up by making adjustments to their practices and expectations. The sad news is that less than 33 percent of bankrupt firms with financial forecasts in their business plans actually compared their results with their forecasts, and only 40 percent of those took any remedial action when their forecasts differed from their goals. (Source: Failing Concerns: Business Bankruptcy in Canada, Characteristics of Business Owners 1992 by U.S. Department of Commerce)

Plus, if an entrepreneur chooses to go the bank route, most bankers will ask for a business plan.

 

Greg,
Thanks for your comments. 
I’ve found that financial sources who require financials don’t have any idea what the details mean.  Picking a financial backer who brings more to your business than money is key.  My experience has been that if you find people who understand the business they already know if your approach makes sense. 
Financial projections are a best guess.  One highly successful investment banker once told me that if I could halve my revenue and double my costs and still be happy that would be good.  He didn’t give me any money.
Jim
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