172 ENTREPRENEURSHIP
Organization and Management. From beginning to end, the business plan is a docu-
ment with a purpose. In the preliminary sections, it introduces the firm in a general way.
In the main body, the firm reviews its objectives, its market, and the strategy for reach-
ing its objectives. The financial portion indicates the funds needed to launch the venture
and the predicted size of sales, profits, and growth. The question that recurs to the read-
er throughout is: “Why should I believe any of this?” The answer lies in the section on
organization and management. This section describes the firm’s people— the entrepre-
neurs and top management team—as well as the firm’s technical, reputational, and
human resources. Before proceeding to the section on ownership, which presents the
deal and actually asks for money, the reader wants to know that the people involved are
of the highest quality. The saying goes, “Give us a B plan with an A team over an A plan
with a B team... every time.”
Key personnel resources are presented on an organization chart with the names and
titles of the key executives. Brief synopses of these individuals’ previous experience, edu-
cation, and related qualifications are included, and complete resumes of top managers
and key executives may be placed in an appendix. Readers will want to know whether
these people have worked together before and in what capacity.
What are these individuals’ contributions to the company? Who will do what, and
why was he or she chosen for that role? What contractual relationships exist between the
company and its principals, and between the principals? Are there employment con-
tracts, severance packages, or noncompete agreements?
Initial salaries, incentives, bonuses, pensions, and fringe benefits of the top people are
also of interest to investors. It is wise to keep initial salaries low to conserve cash and to
keep deferred compensation (stock options and the like) high to produce long-term
commitment. What key positions remain unfilled? Job descriptions of these positions
should include the unique skills, abilities, and experience the firm needs, and plans
should be presented for attracting, developing, and retaining key personnel. Without
such plans, people problems will inhibit growth.
A list of the firm’s board of directors, their ages, their relevant experience, their other
corporate affiliations, and their connection with the firm is another component.
Providing the names of the legal, accounting, banking, and other pertinent organiza-
tions (marketing or advertising agencies, consulting firms, and the like) can also influ-
ence investors.
A statement of the firm’s basic philosophy concerning human resources and manage-
ment strategy is also important. Does it favor close or general supervision? Will the
workforce be unionized? What is the firm’s approach to collective bargaining? What is
its position on employee compensation, profit sharing, and employee ownership? What
is the rationale for such programs? How will the firm manage and control health-care
and insurance costs? What are its strategies for employee and management development
and training, for continuing education, and for hiring and promoting from within?
What factors dictate criteria for promotion? How will performance be assessed? How
many employees does the firm currently have, or how many will be required to start the
new venture? What are these employees’ responsibilities, positions, and job descriptions?
What percentages are skilled and unskilled? A pertinent analysis of the relevant labor
markets by type of skill and geographic scope is required.
What equal opportunity employment and other government regulations affect the firm