Tag Archives: business design

Top 7 Benefits of a Business Plan

Many wonder why a business plan? Well, here are the Top 7 benefits in my view:

1) Forces you to summarize the business model

2) Establishes goals, direction, gaps and action plans

3) Forces alignment

4) Establishes performance metrics and accountabilities

5) Helps prioritize budgets and hiring decisions

6) Creates core content that can be repurposed for VC presentation deck, prospectus and sales collateral

7) All serious businesses have a business plan whether it is de-facto or intentionally stated.

More: Most customers, investors and other stakeholders will demand to see a business plan – on paper and/or permeating your business.

Many corporations do a three year planning cycle with annual updates.

Most investors require five year financials – which need justification with a business plan.

Now better get on with it to update your business plan!

© Strategy Dynamix, LLC All Rights Reserved

What is your perspective?  Please share your thoughts in the comment section below.

About the Author
Sylvester (Syl) Di Diego, Managing Partner, Strategy Dynamix, LLC is a venture advisor and interim executive who delivers venture accelerator solutions, He has assisted hundreds of entrepreneurs and investors to successfully navigate the venture growth lifecycle and helped to raise  $300 million of capital. Learn more about Syl and connect with him at http://www.strategydynamix.com/aboutus/executives.php.

Advertisements

12 Ways to Avoid ‘Dead Weight’ Founders and Partners

For various reasons start up ventures often end up with ‘Dead Weight’ Founders and Partners. These are people with misaligned expectations from yours who often become an energy zapper and in the worst cases become an obstacle to technology development, capital raising, strategic alliance formation, etc. In my last article I advised you to “Dump Dead Weight’ Founders and Partners Overboard”. In this article I offer my recommendations about how to avoid taking on ‘dead weight’ founders and partners. Here we go.

1,  Recruit people to help with your venture in an intentional manner.

2. Address expectations about contributions, compensation, etc. from the initial point of involvement.

3. Hold discussions with each person in a scheduled and formal manner – not just at the bar or in the car.

4. Start documenting discussions and mutual understandings early on. And continue this practice.

5. Clarify roles and compensation understandings according to each area of contribution by a person.  It is ok to have one person serve in several roles, but you should delineate different compensation schemes for each distinct role – for example, programming (fee based) and sales (fee plus commission).

6. Establish goals and performance metrics for each person and each role as soon as practical.

7. Consider offering consulting roles or deferred compensation in lieu of offering equity shares or expectations of employment early on.  When long-term involvement becomes mutually desirable, then, and only then, move on to consider other compensation arrangements with each person– such as salary, profit sharing, stock options or equity share.

8. Describe the conceptual business understanding of functional roles, responsibilities and associated compensation in a general non-binding memorandum before meeting with attorneys. This saves time and money with attorneys.

9. Clarify ownership and equity expectations carefully (and from a long term perspective) and then formalize the understanding with legal documentation and mutual sign off.

10. Revisit roles and compensation arrangements with each person whenever appropriate, as the venture evolves, and document any changes.

11. As you add people to your team you need to balance the overall scheme of roles, responsibilities and compensation on a relative basis by considering the entire team as well as future roles to be filled at the company.

12. Engage a venture consultant or HR consultant who deals with start-ups and ramp-ups and who can guide you with workforce planning, role definitions, expectations setting, compensation approaches and other issues.

By following the above best practices you will be able to avoid many situations which might otherwise result in “Dead Weight” founders and partners. Instead, you will be able to focus your energy and mindshare on technology and product development, gaining customers, etc. – all in a more positive working environment. And there will be clarity for all stakeholders to more smoothly move through transition stages and grow your venture.

© Strategy Dynamix, LLC All Rights Reserved

About the Author
Sylvester (Syl) Di Diego, Managing Partner, Strategy Dynamix, LLC is a venture accelerator and venture consultant who has assisted hundreds of entrepreneurs and investors to successfully navigate the venture growth lifecycle and to ReDesign, RePosition, ReLaunch and to Scale technologies, products, services and businesses. Learn more about Syl and connect with him at http://www.strategydynamix.com/aboutus/executives.php

Dump “Dead Weight” Founders and Partners Overboard

Too many ventures are burdened by ‘dead weight’ founders and partners. This can seriously sap momentum and even kill a deal for a strategic alliance or for venture capital. If this is happening to your venture then take control today to clean up any tangled messes among partners, no matter what the cost, or else pay the price.

Often a VC or strategic partner is interested in moving forward, but a range of unresolved issues among people involved with the venture are now stumbling blocks to doing a deal – or even to finishing due diligence. These might be misunderstandings, misaligned expectations, or outright disputes about roles, contributions, equity shares or technology ownership.

How Does One Find Themselves in a Founder/Partner Quagmire?
Typically a start up venture has a champion who enrolls their friends, family or other associates to help at the early stage of a venture when the entrepreneur has no resources. Associates offer to help out for various reasons – perhaps out of friendship, or they may have keen interest in the app, technology, product or service. Others have hopes to snag an official role in the venture as it grows and hope to win a big payout if things go well.

The entrepreneur’s motives are usually much simpler and short term. Struggling to develop a product or launch a company, the entrepreneur looks around to pull in any breathing person who can relieve some of the stress to help get 100 things done at once. With little or no money, entrepreneurs respond openly to friends’ and associates’ offers to help with a bit of code, prepare some branding materials or to make a few sales introductions. But all this is often done in a vague manner with very little clarification of expectations or responsibilities and most often with no documentation. This is especially becoming harder to manage as entrepreneurs work at incubators, accelerators and co-working spaces where the thrill of cross-pollination is enjoyed on a personal level, but which may launch the venture into perilous waters in terms of the entity’s corporate interests.

Take Control of Your Venture’s Destiny
As the venture champion, you are the captain of the ship. You must intentionally chart the course, design the team and draw upon experienced start up advisors in order to define and navigate your venture to a desirable destination. Bring clarity to the ownership and management of the venture as soon as possible. By addressing partner confusion you will set the stage for renewed energy and momentum for developing the technology and business. And you will also be able to meet new strategic partners and potential investors with confidence. Finally, you will have smoother exits when the time comes, while still maintaining friendships. So if you find you are now in such a quagmire, by all means, don’t be afraid to throw overboard any dead weight players in order to keep the venture moving onward and upward.

© Strategy Dynamix, LLC All Rights Reserved

About the Author
Sylvester (Syl) Di Diego, Managing Partner, Strategy Dynamix, LLC is a venture accelerator and venture consultant who has assisted hundreds of entrepreneurs and investors to successfully navigate the venture growth lifecycle and to ReDesign, RePosition, ReLaunch and to Scale technologies, products, services and businesses. Learn more about Syl and connect with him at http://www.strategydynamix.com/aboutus/executives.php

Business Plan FAQs and Answers

What is a business plan?

A business plan is a communication tool to align understanding and influence stakeholders to make decisions, affirm commitments and to take action.

A business plan is the summary of a business model and total viability of a business opportunity.

A business plan is the summary of the purpose, objectives, strategies, activities, and financial profile of a business entity or other organization.

A business plan is a living document that reflects current status and directs to future state.

Why do I need a business plan?

A business plan is needed whenever you intend to start up, lead, operate, finance, grow, reposition, turnaround, merge, acquire, exit or close a business.

Who is the key audience of a business plan?

The key audience includes all stakeholders of a business such as investors, bankers, board members, management, employees, certain alliance partners, and certain customers. 

What are the major elements in a business plan?

The major elements of a business plan are: executive summary, business description, pricing, technology, patents, market, R&D, product development plan, go to market plan, operating plan, personnel plan, financing plan, financial statements and related information, and exit plan.

What are the common pitfalls of a business plan?

Most business plans are too long, incomplete, unconvincing, not compelling and/or out of date.

What is the recommended length of a business plan?

A business plan should be ten (10) pages including a one (1) page executive summary. Significant supporting data should be selectively included as addenda to the business plan.

How long does it take to prepare a professional business plan?

The time to prepare a professional business plan varies depending on the status  of business model design, prior strategic thinking, availability of various elements of the business plan including understanding of customers and markets, availability of key data, status of the financial model,  availability of key executives involved in the process, and experience of the business plan writer/facilitator.

An experienced business plan consultant can provide an accurate estimate of time required to prepare a revised professional business plan based on a brief look at your current information or business plan draft.

How often do I need to update my business plan?

A business plan should be updated whenever there are significant changes to your strategy, products, customers, competitors, alliance partners, profits, or valuation; significant changes to government regulations or industry structure; or when you are trying to convince a stakeholder to make a decision on partnership, financing, investment or any other material strategic change.

What are resources for creating a business plan?   

Get started with general information at Small Business Administration 

Obtain advanced assistance to access and gain deals with investors with professional management consultants like Strategy Dynamix, LLC.

© Strategy Dynamix, LLC All Rights Reserved

Strategy Dynamix, LLC empowers people to ReDesign, RePosition and ReLaunch technologies, products, services and businesses – from concept to execution, since 2001.

The 5 Reasons VCs Invest in Ventures

Entrepreneurs are challenged to find and convince serious investors to evaluate and actually finance their new ventures. There are common characteristics that attract venture capitalists (VCs) as well as other investors – whether family, friends, angels, or strategic investors. Designing your business model with these five key components will contribute to success in financing your new business.

First, there has to be a big market opportunity. The total market itself has to be substantial – well over US$1 billion or more depending on the sector, and there must be a large ‘available market’ for the company’s product or service. Of course, one also must convince potential investors you have a realistic go-to-market plan and scale up plan to access and play in the market.

Second, the offering, whether technology, product or service, has to be new, novel and competitive. The new or novel features, benefits and performance characteristics have to be at least several magnitudes of improvement over alternative available solutions. And these advantages have to be well protected in order to provide a sustainable leading competitive advantage over a significant period of time.

Like all competitive endeavors, a team of stars is a must. Individuals have to be outrageously excellent leaders in their field with relevant accomplishments to propel the venture forward and upward. More, the combination of talents of the team has to be significantly complementary and the cooperation among members has to be evident and robust.

Fourth, an extraordinary financial opportunity has to be clear. Projections must demonstrate top line revenue growth potential with attractive cost and profit structure that drive great cash flow generation. Most importantly these measures need to be rooted in specific go-to-market plan and scale-up plan that are convincing and defendable.

Finally, the investment opportunity must fit with investor’s criteria. Not only must target financial metrics be available – including meeting the hurdle rate for Return on Investment (ROI), but just as critical is the fit with the investor’s preference for certain sectors and geographic locations.

To conclude, entrepreneurs and leaders with a business design for a new venture that is composed of these five critical components are well positioned to attract investor interest in a viable business. It is your job to articulate these characteristics in a compelling manner in your business plan and in person to close the deal!

Best, Sylvester Di Diego

© Strategy Dynamix, LLC All Rights Reserved

Share