Tuesday, November 30, 2010
Monday, November 29, 2010
Basics of Business Plan Screening Part 02
It can be said that the marketing section of a business plan expresses how the business intends to engage the world around it. This expression provides the context for the rest of the business plan.
Studying the marketing section allows proper understanding of how the business is supposed to work; what activities it will engage in, who all the players are, what’s supposed to happen, when and how and why, etc. If the marketing section tells the right story, it is onward to the organization section.
How the business intends to organize and lead its people is a key factor is determining the probability of viability of the business. In the organization section, the business lays out how it is going to meet its functional responsibilities to best carry out the activities laid out in the marketing section. For example, does the organization and deployment of personnel reflect the skill sets and “fit” required to carry out the functional responsibilities? If the organization section doesn’t properly support the marketing section, the whole plan is chucked out. If the organization section tells the right story, it is on to the financial section.
Studying the marketing section allows proper understanding of how the business is supposed to work; what activities it will engage in, who all the players are, what’s supposed to happen, when and how and why, etc. If the marketing section tells the right story, it is onward to the organization section.
How the business intends to organize and lead its people is a key factor is determining the probability of viability of the business. In the organization section, the business lays out how it is going to meet its functional responsibilities to best carry out the activities laid out in the marketing section. For example, does the organization and deployment of personnel reflect the skill sets and “fit” required to carry out the functional responsibilities? If the organization section doesn’t properly support the marketing section, the whole plan is chucked out. If the organization section tells the right story, it is on to the financial section.
Friday, November 26, 2010
Basics of Business Plan Screening Part 01
When I was a practicing stockbroker, one of the things I did was to screen business plans submitted by entrepreneurs seeking to raise money. Typically, the entrepreneurs either wanted to enter a new market or to expand their presence in an existing market.
As you might imagine, when you’re screening something, you’re screening against a set of standards. Business plans are no different. More on this later.
Business plans are usually presented in sections. When asked to review a business plan, amateurs go immediately to the financial section. They want to see all the numbers in the tables and spreadsheet projections. They figure that’s where the most important information is. Not so. To be sure, the numbers are important. After all, profit is measured in numbers. But, without proper context, those numbers are meaningless.
Sad to say, most plans had great numbers but were not well thought-out. In fact, fewer than 5% made the cut. Of the remaining 95%, most went directly to the trash can after the first screen, with some surviving a second screen before they ended up there.
It is legitimate to ask why so many business plans did not survive the first screen. The answer lies in the order in which the different sections of the plan were screened.
Where the amateur wants to jump right into the numbers, the pro starts with the marketing section because that’s where the real meat of the business plan is. If the marketing section doesn’t tell the right story, there is no need to look farther, the whole plan is chucked out.
As you might imagine, when you’re screening something, you’re screening against a set of standards. Business plans are no different. More on this later.
Business plans are usually presented in sections. When asked to review a business plan, amateurs go immediately to the financial section. They want to see all the numbers in the tables and spreadsheet projections. They figure that’s where the most important information is. Not so. To be sure, the numbers are important. After all, profit is measured in numbers. But, without proper context, those numbers are meaningless.
Sad to say, most plans had great numbers but were not well thought-out. In fact, fewer than 5% made the cut. Of the remaining 95%, most went directly to the trash can after the first screen, with some surviving a second screen before they ended up there.
It is legitimate to ask why so many business plans did not survive the first screen. The answer lies in the order in which the different sections of the plan were screened.
Where the amateur wants to jump right into the numbers, the pro starts with the marketing section because that’s where the real meat of the business plan is. If the marketing section doesn’t tell the right story, there is no need to look farther, the whole plan is chucked out.
Saturday, November 20, 2010
Forgetting the Basics
Personal experience has proven to me that some people in business often get so distracted in dealing with crises that they overlook the basics. Being out of sight, they figure that the basics will take care of themselves. Nothing is farther from the truth.
The real truth is: (1) crises usually start small (kind of below the radar) and at that point, they don’t look like they will become crises because they are looked at in isolation—out of context. This makes it look like an isolated case, rather than the beginnings of a pattern, and therefore, not important. As a result, when they get do big enough to “get in your face”, it’s easy to get the impression that they have appeared suddenly, overnight; (2) the sad truth is that crises usually occur when one or more basic principles has been totally overlooked or, if not totally overlooked, underappreciated. In small businesses, this happens more often than not.
The real truth is: (1) crises usually start small (kind of below the radar) and at that point, they don’t look like they will become crises because they are looked at in isolation—out of context. This makes it look like an isolated case, rather than the beginnings of a pattern, and therefore, not important. As a result, when they get do big enough to “get in your face”, it’s easy to get the impression that they have appeared suddenly, overnight; (2) the sad truth is that crises usually occur when one or more basic principles has been totally overlooked or, if not totally overlooked, underappreciated. In small businesses, this happens more often than not.
It's Time to Go Back to the Basics
He never had a losing season as a head football coach. While a student at Fordham University, he played defensive guard. Later, he coached at Fordham.
Still later, he coached at the U.S. Military Academy, West Point, as Assistant Coach to Earl "Colonel Red" Blaik. Later yet, he coached for the New York Giants, the Green Bay Packers, and the Washington Redskins.
But, who was this man? Aside from being one of the most successful coaches in the history of American football, this man was a very colorful character, an astute observer and a solid thinker. One thing was sure. He never forgot to take care of the fundamentals.
The season before he became head coach, the Green Bay Packers had won only one game. Ever observant, this man had concluded that the team had oriented itself around making the flashy play.
True, the players were some of the best athletes in the world. True, some were the highest paid athletes of their day. But they had made the common mistake of thinking that the fundamentals would take care of themselves. This coach knew that before this team could expect to be a winning team, he would have to reprogram the players' thinking.
On the first pre-season meeting, the coach picked up a football in one hand and gathered his team in front of him. For several seconds, he silently looked the players over. Then, holding the football up, he said, "Gentlemen, this is a football." In those five simple words, this coach clearly demonstrated that he was going to make sure every member of the team knew he would be going back to the basics.
The players responded and the Green Bay Packers became renowned, not for brilliant plays, but for flawless execution of the fundamentals of football. At the beginning of each season, this coach gave the same 5-word speech.
Under his leadership, the Packers collected six division titles, five NFL championships, two Super Bowls, and acquired a record of 98-30-4. He died September 3, 1970 at age 57 after a short bout with cancer. His combined record: 105-35-6.
The Superbowl Trophy, which represents the highest achievement in professional football, was renamed in this man's honor. But, who was this man?
It is not without good reason that the trophy is named "The Vince Lombardi Super Bowl Trophy" after Vincent Thomas Lombardi.
Still later, he coached at the U.S. Military Academy, West Point, as Assistant Coach to Earl "Colonel Red" Blaik. Later yet, he coached for the New York Giants, the Green Bay Packers, and the Washington Redskins.
But, who was this man? Aside from being one of the most successful coaches in the history of American football, this man was a very colorful character, an astute observer and a solid thinker. One thing was sure. He never forgot to take care of the fundamentals.
The season before he became head coach, the Green Bay Packers had won only one game. Ever observant, this man had concluded that the team had oriented itself around making the flashy play.
True, the players were some of the best athletes in the world. True, some were the highest paid athletes of their day. But they had made the common mistake of thinking that the fundamentals would take care of themselves. This coach knew that before this team could expect to be a winning team, he would have to reprogram the players' thinking.
On the first pre-season meeting, the coach picked up a football in one hand and gathered his team in front of him. For several seconds, he silently looked the players over. Then, holding the football up, he said, "Gentlemen, this is a football." In those five simple words, this coach clearly demonstrated that he was going to make sure every member of the team knew he would be going back to the basics.
The players responded and the Green Bay Packers became renowned, not for brilliant plays, but for flawless execution of the fundamentals of football. At the beginning of each season, this coach gave the same 5-word speech.
Under his leadership, the Packers collected six division titles, five NFL championships, two Super Bowls, and acquired a record of 98-30-4. He died September 3, 1970 at age 57 after a short bout with cancer. His combined record: 105-35-6.
The Superbowl Trophy, which represents the highest achievement in professional football, was renamed in this man's honor. But, who was this man?
It is not without good reason that the trophy is named "The Vince Lombardi Super Bowl Trophy" after Vincent Thomas Lombardi.
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