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This sounds like the beginning of a funny story: Have you heard the one about the venture capitalist who said you should write your own business plan? So have we.
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 It goes something like this: venture capitalists prefer that entrepreneurs author their own business plans so that it's clear that they (the entrepreneurs) have a full understanding of their business. I have no problem with that. But it strikes me as a little odd that the assumption is that if you don't write your own business plan, you don't understand your business.
Having worked with many entrepreneurs in the process of conceiving start-ups and lots of intrapreneurs — the guys starting new ventures in established companies — it's clear that most entrepreneurs are a repository of product and technical knowledge in their particular industry — they know their stuff. We're not here to tell them about the physics of digital imaging or discuss the intricacies of blood-brain barrier issues. We are here to talk business — what's the right approach to market, what percentage of revenues do competitors put toward R&D and G&A?
We bring expert skills in researching, benchmarking, strategizing, and offering constructive criticism when we are working on a business plan. Through the entire business plan process, we work our way through the hard questions that must be asked and answered to push and pull businesses forward.
Good business plans are all about focus — honing in on what's important and disregarding the rest — just like the business itself. The point of the business plan exercise is to structure a coherent business plan that demonstrates that you know all of the questions — even when you don't know all of the answers. Taking our clients through the process, step-by-step, gets us to the goal together. By working closely with our clients through every step of the process, there isn't a chance that there's something in that business plan or presentation that hasn't been discussed, reviewed or reworked, until our clients say "that's it." The end result of the process, when a team works well together, is the articulation of that unique nexus of the entrepreneur's mission, the market opportunity, and the investors' exit strategy.
Many people have a great technology with lots of potential applications; every Tom, Dick and Harry (or Chaim, Shmulik and Dudu) has a great idea. The question is whether the technology or product or service has market potential and if the story can be told and sold. Anyone walking into a VC's office has to have a compelling story to tell; beyond neat technology they had better have a strong plan to make this fine vision a wealth-generating reality. And, they need to sell the story in an organized and coherent manner.
In Red Herring, former editor Alex Gove noted that many entrepreneurs need to invest more time in preparing for their first meeting with a VC, just as they would for a journalist. "It's vital that you talk to someone in advance who's been through the process and can throw you some curve balls," he noted. Whether you're writing a business plan or rehearsing for a VC meeting, you need to cover your bases. As a former Boy Scout, I guess that I'd sum that up by saying "be prepared."
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The Trendletter team welcomes your comments.
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D. Todd Dollinger
Managing Director
The Trendlines Group
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