Tag Archives: small business

  • The Business Plan vs Executive Summary Debate

    November 6, 2007 | Business Plans, Management & Strategy

    Which is better, the business plan or the executive summary? Academic institutions and the marketplace appear to be moving in opposite directions on this question. While many business students are required to develop 30- to 50-page business plans, we’ve found that these lengthy documents are used less and less in the real world, with the exception of more mature businesses in private equity or M&A transactions. For most early-stage businesses, 95 percent of a business plan is projection and conjecture, more akin to a work of fiction than an outlining of facts. And, deluged with plans, most investors have very limited time to spend reading. Most will look at a few pages and make a decision in a matter of minutes. If they cannot quickly figure out what the business does, how it is different from everyone else’s and why they should be interested, your plan is dead in the water.

    A business plan/summary cannot be too short, it can only be too long. When plans are too long, they simply aren’t read. But, if you are able to pique investors’ interest with even a one-page summary, they are going to reach out to you for answers to their questions. And remember, this conversation is the primary objective of your written materials. No investor is going to write a check on the strength of the business plan alone. Other elements of a traditional business plan—such as financial projections, market research, detailed competitive analysis, and intellectual property and technical or product schemas—can be delivered after the audience’s attention is captured. (It’s also much easier to keep these detailed pieces up to date when they are separate from the fundraising piece.)

    Our recommendation is that you focus on creating a three to four-page, detailed, executive summary that can be made into a PDF. The first paragraph should succinctly deliver your value proposition and explain why this is an attractive opportunity for an investor. In the next three to four paragraphs, provide the logic behind this assertion with key high-level data as supporting evidence. This summary should be your primary document when approaching prospective investors. If someone wants to learn more, ask for a call or a meeting, but don’t send additional information to someone who won’t take the time for either of these activities. If you do get a meeting or a phone call, we recommended that our clients have ready a 10- to 15-page PowerPoint presentation as well as backup documents, including sales projections, a financial model, any technical or intellectual-property documentation and any detailed market research available.

    Developing an executive summary can be hard work. One of the processes that we undertake in developing a summary is to break the content up into distinct sections. This process of separating out and addressing key investor issues individually is often eye-opening, and entrepreneurs often find they need to rethink some of their assumptions. Certainly, it’s easier to obfuscate gaps with density in a long business plan. But that’s one reason why the summary is better. It brings to mind a quote we are fond of: “If I had more time, I would have written a shorter letter.”

  • Outsourcing: You Have To Drive the Bus

    April 12, 2007 | Management & Strategy, Operations

    One of the great things about starting a business today is the number of smaller consulting firms that can help you. These outsourced partners can serve as an integral resource for your team at an early stage but there is a catch.

    You can’t do it all so that’s why you hire the experts. This is what we do at Acceleration Partners and along with other service providers who excel in the marketing, legal and financial aspects of helping to start a business, we are able to help fill the “seats on the bus” for the founder or founding team. This gives an early stage company the level of expertise it needs without the need for long term commitments or having to make permanent hires at an early stage without a real sense for what resources and skills will be needed in the long term. It’s the equivalent of renting an apartment in a new town if you aren’t sure which neighborhood you want to live in.

    Consultants or interim resources are a great “extension’ to you team, but you should not look to others to provide the inspiration or overall direction for your company. Someone on your team needs to wake up each and everyday wondering what it is going to take to make the business a success and have that be their sole objective. Using Jim Collins’ bus analogy again, it’s fine to ask for directions or move the seats around and it’s even okay to ask others to hold onto the steering wheel for a few seconds. However, it’s never a good idea to ask a consultant or outsourced partner to drive the bus. The only exception is if you are planning on grooming them to take over as the permanent driver sometime soon.

    The bottom line is that you simply can’t outsource the passion for your idea and every successful new business needs someone who is passionate and driven by what the company does. Consultants tend to be functional experts, while founders tend to be subject matter experts. Consultants can help you ground, improve, guide and direct your business, but they often don’t have the same passion for your industry or have the purpose driven ambition that caused you to start your business in the first place

    So my advice is to fill the bus with good people, but always keep your own two hands on the wheel. Once you hit the highway and you have momentum, you can always look to getting a more qualified manager to take your place, but make sure they are as invested as you are in the outcome of the business.