You start your business for the wrong reasons Poor Management ...

parakeetconspiracyManagement

Nov 20, 2013 (3 years and 11 months ago)

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Successful Commercialization


Relies Upon the Strength of Your



Business Plan

1.
You start your business for the wrong reasons

2.
Poor Management

3.
Insufficient Capital

4.
Location, Location, Location

5.
Lack of Planning

6.
Overexpansion

7.
No Website

Source: http://www.businessknowhow.com/startup/business
-
failure.htm

According to Dun & Bradstreet reports, “Businesses with fewer than 20 employees have only
a 37% chance of surviving four years (of business) and only a 9% chance of surviving 10
years.” Restaurants only have a 20% chance of surviving 2 years.


Of these failed business, only 10% of them close involuntarily due to bankruptcy and the
remaining 90% close because the business was not successful, did not provide the level of
income desired or was too much work for their efforts.


The failure rate for new businesses is 70% to 80% in the first year and only about half of
those who survive the first year will remain in business the next five years.

Basic Premise

“People Don’t Plan To Fail, They Fail To Plan.”

F
UNDAMENTALS

OF

S
UCCESSFUL

B
USINESS

P
LANNING



INNOVATION IS ONLY THE BEGINNING


YOU GOT YOUR PATENT,
NOW WHAT?



WHERE YOU START DEPENDS UPON WHAT YOU NEED
-

ARE YOU
TYPE A OR B



BUSINESS STRUCTURE GUIDES YOUR PURPOSE AND YOUR MESSAGE,
SOLE, LLC, LLP, SUBCHAPTERS, CORPORATIONS, PARTNERSHIPS



DIY VS. LICENSING
-

CRITICAL DIFFERENCES IN CRAFTING YOUR PLAN

1.
You start your business for the wrong reasons

2.
Poor Management

3.
Insufficient Capital

4.
Location, Location, Location

5.
Lack of Planning

6.
Overexpansion

7.
No Website

Perspective

Critical Decisions Require Analysis & Planning

Quickbooks New Business Checklist

Six Steps to Startup Success

Conceive Your Business

Focus Your Idea

Research Your Idea

Choose a Name

Write a Business Plan

Structure Your Business

Choose an Organization Type

Consult Professionals

Set Up Your Financial Systems


Prepare All Necessary Forms, Permits, Licenses

Overview of Federal, State, Local Requirements

Obtain a federal Tax ID Number

Register Your Business Name

Obtain all necessary Licenses and Permits

Fulfill All Employer Requirements

Secure Intellectual Property

Take Care of Local Requirements

Fund Your Business

Use Your Own Assets

Borrow From Friends and Family

Borrow From a Bank

Minority or Women’s Organizations

Apply for a Grant

Other Sources of Equity Funding

Taxes & Insurance

Fulfill All Tax Requirements

Keep Detailed records of All Deductible Items

Track What You Need To Report on Your
Income Tax Forms

Obtain Insurance

Manage Business Finances

Manage Operations

Improve Cash Flow

Manage Receivables

Hire Employees, Contractors, Temps?

A
NGELS

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ETAILS

Nine out of ten business failures in the United States are caused by a lack
of general business management skills and planning.

Planning Against A Business Failure, Rob Holland, Small
Business Development Center, Troy State University, Troy,
Alabama.

1) Going into business for the wrong reasons

2) Advice from family an friends

3) Being in the wrong place that the wrong time

4) Entrepreneur gets worn
-
out and/or underestimated the time requirements

5) Family pressure on time and money commitments

6) Pride

7) Lack of market awareness

8) The entrepreneur falls in love with the product/business

9) Lack of financial responsibility and awareness

10) Lack of a clear focus

11) Too much money

12) Optimistic/Realistic/Pessimistic

According to Dun & Bradstreet statistics, 88.7% of all business failures are due to management

mistakes. The following list summarize the 12 leading management mistakes that lead to
business failures.

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AISING

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ONEY

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AISING

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NTEREST

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AISING

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REAT

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DEA

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AISING

M
ONEY


P
AINTRACE

T
ESLA

1.
You start your business for the wrong reasons

2.
Poor Management

3.
Insufficient Capital

4.
Location, Location, Location

5.
Lack of Planning

6.
Overexpansion

7.
No Website

Perspective

$50 Million

From Toyota

Friends & Family

Investment Criteria FOR ENTREPRENEURS

Submit your Business Plan

You've taken a look at our investment criteria, read all about our process, polished your business
plan, and perfected your presentation.

Now you're ready to fill out our Application form and get started.

New York Angels
-

provide early
-
stage capital in the range of $250,000
-

$750,000, an
investment range not generally served by venture capital funds. Since 1997, we and members of
our predecessor group have invested over $28 million in more than 65 ventures companies.

Our members are entrepreneurs, CEO's, venture capitalists and business leaders who have
founded, funded and built world
-
class companies. We mentor and coach the entrepreneurs in
whom we invest, serve on their boards, provide contacts and assist with team building, strategic
planning and fundraising.

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Investment Criteria


Guidelines for Crafting Your Business Plan

While the merits of each investment will vary, we evaluate your venture according to the following
criteria:



* Management team.


* Market opportunity.


* Use of proceeds.


* Growth potential.


* Competitive advantage.


* Fit.


* Technology.

We prefer to invest in first
-
of
-
a
-
kind new ideas, rather than incremental


enhancements to common products and services. Is this a nice
-
to
-
have, or a need
-
to
-
have


product or service? However, we approach highly complex, esoteric technologies with


caution. The concept behind the technology must be proven and verifiable. Further, we


avoid science projects that don't demonstrate a clear path to commercialization. Any


breakthrough innovation must be accompanied by a strong business plan.


* Exit strategy.


We look for teams of high
-
quality entrepreneurs
with a track record of leadership and
performance
-

either in the company's specific
industry or in prior entrepreneurial ventures.
We also look at your team's passion for and
commitment to the new business idea, and your
ability to inspire confidence among future
stakeholders, including employees, potential
customers, and investors. As we will be working
together as partners, your team's credibility is
essential. In addition, your team must be open
to and comfortable with receiving input
provided by angel investors.

Management Team

We invest in solutions that address major
problems for significantly large target markets
(i.e. a $100+ million market). Your company
must demonstrate a strategy to claim
significant share of this market (i.e. 20%+).
There are plenty of great business ideas
-

but
not all businesses will generate returns that
justify angel investor and venture capital
financing. Therefore, providing a solution to a
problem with a large potential market is
essential.

Market Opportunity

Use of Proceeds

Funds must be used to accelerate your
company's achievement of key milestones that
increase the company's value. We often fund
activities that include research and product
development, building a sales and marketing
infrastructure and hiring key executives.

We look for companies that can grow quickly
and manage the scale necessary to succeed.
Your company must demonstrate a plan to
generate significant profits beyond the initial
product idea. Do you have a strategy to
achieve multiple sources of revenue?


We also require well
-
conceived financial
projections, based on sound assumptions,
demonstrating consistent profits and cash flow
growth.

Growth potential.

F
INANCIAL

M
ODELING

101
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ALUATION

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ANGUAGE

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NVESTORS

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INANCIAL

M
ODELING

101
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V
ALUATION

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ANGUAGE

O
F

I
NVESTORS

Your company must have some proprietary
features that distinguish you from potential
competitors or provide barriers to entry that
prevent other companies from capturing your
customers with a similar offering. Attributes
that convey competitive advantage include
intellectual property protection, exclusive
licenses, exclusive marketing and distribution
relationships, strong brands, scarce human
resources (i.e. knowledge and skills), and
access to scarce raw materials.

Competitive advantage.

D
IFFERENTIATION

I
S

T
HE

D
IFFERENTIATOR

Our group members
-

all accredited individual
investors
-

have significant executive
experience in a variety of fields. One of the
benefits of working with angel investors is the
active coaching and contact network that such
investors can provide. As such, there must be a
fit between members of our group and your
idea.

Fit

We prefer to invest in first
-
of
-
a
-
kind new ideas,
rather than incremental enhancements to
common products and services. Is this a nice
-
to
-
have, or a need
-
to
-
have product or service?
However, we approach highly complex,
esoteric technologies with caution. The
concept behind the technology must be
proven and verifiable. Further, we avoid
science projects that don't demonstrate a clear
path to commercialization. Any breakthrough
innovation must be accompanied by a strong
business plan.

Technology

Our members typically seek returns of at least
ten times their initial investment, within eight
years. This level of return on investment is
essential due to the high risk and likelihood of
failure among early stage ventures. Thus, a
clearly articulated exit strategy
-

how angel
investors will extract such returns
-

is essential.
For example, do you plan to sell the company
to an established corporation in your industry?
Or will your exit be through subsequent rounds
of financing
-

venture capital or the public
markets? Angel investors are not just
interested in the strategy you select, but more
importantly in the how
-

the operational
strategy that shows specific steps you will take
to achieve the exit.

Exit Strategy

1) Development of a business plan

2) Obtaining accurate financial information about the business in a timely manner

3) Profile of target customer

4) Profile of competition

5) Go into business for the right reasons

6) Don’t borrow family money and don’t ask the family for advice

7) Network with other business owners in similar industries

8) Don’t forget, someone will always have a lower price than you

9) Realize that consumer tastes and preference change

10) Become better informed of the resources that are available

Probabilities for Success

It should be understood that no magic solutions will guarantee a business success.
However, the following items should assist in the improvement of chances for
success.

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UNDAMENTALS

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LAN

The real value of creating a business plan is not in having the finished product in
hand; rather, the value lies in the process of researching and thinking about your
business in a systematic way. The act of planning helps you to think things through
thoroughly, study and research if you are not sure of the facts, and look at your ideas
critically. It takes time now, but avoids costly, perhaps disastrous, mistakes later.

A business plan follows a generic model
suitable for all types of businesses. However,
you should modify it to suit your particular
circumstances. Emphasize certain areas
depending upon your type of business
(manufacturing, retail, service, etc.). Fine
-
tune
your plan to make an effective presentation to
investors or bankers. If this is why you’re
creating your plan, pay particular attention to
your writing style. You will be judged by the
quality and appearance of your work as well as
by your ideas.

D
O

N
OT

U
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A C
OOKIE

C
UTTER

T
O

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UT

A 7 L
AYER

C
AKE

It typically takes several weeks to complete a good plan. Most of that time is spent in
research and re
-
thinking your ideas and assumptions. But then, that’s the value of the
process. So make time to do the job properly. Those who do never regret the effort.
And finally, be sure to keep detailed notes on your sources of information and on the
assumptions underlying your financial data.

If you need assistance with your business plan, contact the SCORE office in your area
to set up a business counseling appointment with a SCORE volunteer or send your
plan for review to a SCORE counselor at
www.score.org
. Call 1
-
800
-
634
-
0245 to get
the contact information for the SCORE office closest to you.

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UNDAMENTALS

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VERY

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LAN

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LAN


Table of Contents

I.
Executive Summary

II.
General Company Description

III.
Products and Services

IV.
Marketing Plan

V.
Operational Plan

VI.
Management and Organization

VII.
Personal Financial Statement

VIII.
Startup Expenses and Capitalization

IX.
Financial Plan

X.
Appendices


Generic

Actual

4. Marketing Plan 16

Price List 2009
-
2010

LSMS/ETView Contract

Logo/Trademarks/Slogans

LSMS/ETView Buyout Agreement

5. Financial Assumptions 23

Income Projection 2009
-
2013

Profit & Loss 2009
-
2013

Cash Summary 2009
-
2013

Expense Projection 2009
-
2013

Balance Sheet 5Yr. Summary

6. Letter to the Investors 28

7. Appendix 30

Income Projection

Expense Projection

Profit & Loss

Balance Sheet

Cash Plan

Table of Contents

1. Executive Summary 1

Business Opportunity

The Product Portfolio

Financial Potential

The Request

2. Company Background 6

Management

Legal Form and Location

Ownership

3. Competitive Advantages 9

Competitors

Competitive Comparison Chart

Competitive Pricing

Questions

Suppliers and Inventory



Write this section last.




Make it two pages or fewer.




Include everything that you would cover in a five
-
minute interview.




Explain the fundamentals of the proposed business: What will your


product be? Who will your customers be? Who are the owners? What


do you think the future holds for your business and your industry?




Make it enthusiastic, professional, complete, and concise.




If applying for a loan, state clearly how much you want, precisely how you


are going to use it, and how the money will make your business more


profitable, thereby ensuring repayment.

Executive Summary

T
HE

S
IZZLE

I
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W
HAT

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ELLS

T
HE

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TEAK

M
ARKETING

R
ESEARCH

V
S
. M
ARKET

R
ESEARCH

Market research
-

How?

There are two kinds of market research: primary and secondary.


Secondary research means using published information such as industry profiles, trade journals, newspapers,
magazines, census data, and demographic profiles. This type of information is available in public libraries,
industry associations, chambers of commerce, from vendors who sell to your industry, and from government
agencies.


Start with your local library. Most librarians are pleased to guide you through their business data collection.
You will be amazed at what is there. There are more online sources than you could possibly use. Your
chamber of commerce has good information on the local area. Trade associations and trade publications
often have excellent industry
-
specific data.

Market Research
-

Why?


No matter how good your product and your service, the venture cannot succeed without effective
marketing. This begins with careful, systematic research. It is very dangerous to assume that you already
know about your intended market. You need to do market research to make sure you’re on track. Use the
business planning process as your opportunity to uncover data and to question your marketing efforts.

Developing Your Marketing Plan

Primary research means gathering your own data. For example, you could do your own
traffic count at a proposed location, use the yellow pages to identify competitors, and do
surveys or focus
-
group interviews to learn about consumer preferences. Professional
market research can be very costly, but there are many books that show small business
owners how to do effective research themselves.


In your marketing plan, be as specific as possible; give statistics, numbers, and sources.
The marketing plan will be the basis, later on, of the all
-
important sales projection.

M
ARKETING

R
ESEARCH

V
S
. M
ARKET

R
ESEARCH

M
ARKETING

R
ESEARCH

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S
. M
ARKET

R
ESEARCH

Economics


Facts about your industry:




What is the total size of your market?



What percent share of the market will you have? (This is important only if you think


you will be a major factor in the market.)



Current demand in target market.



Trends in target market

growth trends, trends in consumer preferences, and trends


in product development.



Growth potential and opportunity for a business of your size.



High capital costs



High production costs



High marketing costs



Consumer acceptance and brand recognition



Training and skills



Unique technology and patents



Unions



Shipping costs



Tariff barriers and quotas

And of course, how will you overcome the barriers?

M
ARKETING

R
ESEARCH

V
S
. M
ARKET

R
ESEARCH

What barriers to entry do you face in entering this market with your new company? Some
typical barriers are:



Change in technology



Change in government regulations



Change in the economy



Change in your industry

How could the following affect your company?

C
RITICAL

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ISTAKES


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CENES

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UTTING

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OOM

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LOOR
)

While a listing of reasons for small business failures
would at first seem lengthy, according to Scott Clark of
the Puget Sound Business Journal, the majority of the
causes can be condensed into the three “Ms” of
business failure; Money, Management and Marketing.

It takes a long time for a start
-
up company to break even because unforeseen

contingencies always develop. In the interim, you still need to support your family.

Before you launch your business, set aside a nest egg that will allow your family to

survive for at least three times longer than the time period you are projecting to

achieve break even with the business. Use this same multiplier to project the
operating capital your company will need; determine your maximum negative cash
flow from your projections and multiply this amount by three to determine the
operating capital you should raise. As tough as it is to raise small
-
business capital, it is
always easiest the first time around. If you raise insufficient capital and only achieve
small successes by the time your money runs out, investors probably won't be
interested in throwing good money after bad.

C
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ISTAKES


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Money

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RITICAL

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ISTAKES


(S
CENES

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LOOR
)

Management

The vast majority of aspiring entrepreneurs fill their management ranks with friends.

This is not only the surest way to break up a friendship, it is also the most predictable

way to enhance failure. Never hire acquaintances to join your management team unless

they have management experience appropriate to the field of your business and they

are willing to openly disagree with you. Otherwise, you are destined to have mediocre

business success at best.

C
RITICAL

M
ISTAKES


(S
CENES

F
ROM

T
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UTTING

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OOM

F
LOOR
)

Marketing

This involves far more than just knowing your market and what motivates it. Most

businesses focus on the marketing "push," but few ever focus on the "pull," which is one

of the secrets to success… This is the cause of failure for many businesses that achieve
early profits from those orders that initially fill the pipeline and then flounder. The key is
to focus on the pull; it is your responsibility, not that of your dealer, to make potential
customers aware of what your product will do for them. In this manner they will pull your
product out of the other end of the pipeline, and orders will continue to flow smoothly.

Q & A

For More Information


Scott Gordon

President

CorProminence LLC

3239 Clint Moore Road, Suite 205

Boca Raton, FL 33496

561 367 3193