THEY DON’T KNOW WHAT’S COMING TO THEM 303
Final check on the plan
You have now reviewed your business plan from the perspective of a potential reader.
Does the plan answer satisfactorily their likely questions? From this perspective, Figure
12.3 illustrates the six most important pages in your plan.
For the business proposition, check that your strategy has unique attributes, that
you do not appear unduly reliant on one supplier, one product or one customer
and that you do not look vulnerable to attack by a big competitor. These should
not be problems given your journey through this book.
For the finances, check that you have highlighted sufficiently the prospective
cash flow. Corporate bosses and bankers will be interested in return on capital
employed or (almost the same thing) return on total assets. If you are looking for
shareholders, emphasise the potentially excellent return on equity.
For a non-profit plan, check that you have highlighted potential attainment
required objectives – social welfare, development assistance, customer service,
prestige, etc.
When you are comfortable that your business plan will do its job, go back to the executive
summary and conclusion (Chapter 3) and rewrite them. Make sure that they read well and
highlight the key facts. In this connection, take a look at Figure 12.3.
At last, you are ready to launch the plan. But do not act too hastily. Please read the next
section first.
They don’t know what’s coming to them
But I was going to send it to those venture capital people in the new business park? Don’t. You
have to make them ask for a copy. Then you have shifted the focus. It is no longer the
case that you are sending the plan to an unwitting recipient. They have asked to see it, are
expecting it, and are more likely to give it consideration.
‘There is no reason anyone would want a computer in their home.’
KEN OLSEN, PRESIDENT, CHAIRMAN AND FOUNDER, DIGITAL EQUIPMENT CORP, 1977
Never deliver a copy of your business plan to someone unless they request
it specifically.
304 CHAPTER 12 GETTING IT APPROVED
Organisation chart
Who are you?
Risks and
Rewards
What do you
want to do?
How will
you do it?
Where
do you
break
even?
How's
your
cash
flow?
What's
in it
for me?
Bright idea
Strategy
Break even
4
3
2
1
0
500
5
$6m
400
Cumulative cash flow projection
$4m
Year 1
3
2
1
0
-1
-2
Year 2 Year 3 Year 4 Year 5
Projected return on equity (ROI)
Prob %
0 10 20 30 40 50 60 70%
Pythagoras
Quality
N. Machiavelli
CEO
Audit
Committee
René Descartes
R&D
Adam Smith
Production
Karl Marx
Sales
David Hume
Administration
Figure 12.3 Six key pages in your business plan
THEY DON’T KNOW WHAT’S COMING TO THEM 305
The first thing that you need to know is the name of the right person. The general rule is
to go in at the top, or as far up the ladder as possible. Sometimes it might be better to
approach a specialist somewhere down the ladder, especially if you know that they will
be sympathetic to your cause. If you have a biotech business, you might telephone those
venture capital people, and ask the receptionist for the name of their biotechnology expert.
Never allow the telephone call to be connected unless you know the name of the person
to whom you want to speak. But you probably do not want to be connected right now.
You want the target to confirm that they do make the required type of investments. Then
you make a one-line reference to your proposition, and hold your breath. With any luck
they will pick up on your comment. If they do not, you might have to ask directly. Tell
them as succinctly as possible:
Why they should be interested in you – I have invented …
What you have – … a safety device that saves companies thousands a week …
What you want – … and I need additional funding to expand the market.
Notice the example. One sentence. A statement of benefits – no specific mention of the
product. An indication that you need funding for a purpose, but again no specifics. Some
people might go further than this and say that they are looking for an investor (custom-
ers do not spend, they invest) to help finance a specific project with guaranteed returns. Try
not to be drawn into great detail yet, but remember that you want to establish a working
relationship with them. Your sole objective is to have them ask you for a business plan. If
you are unlucky, if you get a flat no, ask for a referral to another potential investor. Then
you have a head start when you speak to that person. Joe Smith told me that you might be
interested in …
These are my preferred techniques for contacting your target, with the best
at the top of the list.
1 Have a respected mutual acquaintance introduce you, preferably at a social
gathering.
2 Contrive to meet the intended recipient by ‘chance’ at a business or social
function.
3 Telephone, introduce yourself, and try to arrange a meeting.
4 Write introducing yourself and asking for a meeting.
Do not say too much or hand over the business plan yet.
306 CHAPTER 12 GETTING IT APPROVED
You probably want to start making notes, documenting telephone conversations,
delivery dates and so on. Keep good records and you will not be caught out. In particu-
lar, note which version of the business plan you will hand over. Otherwise, later on, after
knocking on a hundred doors looking for start-up capital, you will be so tired that you will
not remember what you gave to, or followed up with, whom.
DELIVERY
Once a plan has been requested, write a suitable covering letter and deliver it in person if
possible. Try to hand it directly to the reader so that there is a clearly identifiable connec-
tion between your plan and you. Just in case you are called upon to explain the content,
prepare for the first meeting properly as described below before making the delivery.
I’M NOT SIGNING THAT
If you are protective of the information in your business plan – and remember it contains
your strategy, your secrets – you are fully entitled to ask readers to sign a confidentiality
agreement before delivery. Some plan owners are embarrassed about doing this. There
is no need to be. Some financiers get uppity. They are entirely in the wrong. Professional
bankers and investors understand that you are entrusting them with trade secrets and
will sign without hesitation. Well, after one hesitation. They could well want their legal
adviser to review the agreement first. Be ready to accept their own form of words, a sim-
plified agreement, or tolerate a slight delay.
Overheard at the golf club
‘George, I’d like you to meet Joe.’
‘Nice to meet you, did you have a good game. …’
After a few moments general chat:
‘George, Maggie told me that you are a banker.’
‘Yes, I’ve just taken over the corporate finance department.’
‘That’s interesting, I’m looking for funding to expand my marketing company.’
‘It might be of interest to us, do you have a business plan?’
‘Of course. Maybe I could bring it round to your office next week?’
‘Check with my secretary. I’m probably free on Wednesday afternoon.’
t
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