Dollinger index

(Kiana) #1
The Business Plan 177

profit figures. Therefore, the data should have a solid foundation in reality. At the same
time, projections must be optimistic enough to indicate a solid return for investors. This
is a basic conflict in many new ventures, and inconsistencies will be thoroughly exam-
ined.

Exit
Investors want to know how and when they will recoup their money. There are many
alternative mechanisms for exiting, but the exit will occur in the future after many uncer-
tain and risky activities. The fact that the exit is fraught with peril, however, will not
restrain investors from trying to pin down the exact details of the proposed exit. They
are naturally concerned about their money, and entrepreneurs should expect them to
pose many “what if ” scenarios.
The overall evaluation of the plan may rest on the quality of the management team
and the current status of the product or service. These areas must be supported in great
detail. The evaluator wants to see experienced management in the new business or a
closely related business. If this cannot be documented, the entrepreneurs might have to
establish an advisory board. Likewise, it is important to establish that the product/serv-
ice has proven market traction. If the product offers a twist on anything that currently
exists, data on comparable products will be helpful. When the product/service is unique
to the market, management team experience becomes even more essential. The Rich-
Gumpert Evaluation System (Figure 5.1) is a useful tool for checking the ranking an
entrepreneur might receive. The most desirable ranking is the 4/4.

FORMAT AND PRESENTATION


The format of the business plan and its physical presentation make the first impression
on the reader. Deliberate care and attention are needed to make this impression positive.

Physical Appearance
Ideally the physical appearance of the plan is neither too fancy nor too plain. An ex-
tremely ornate binding and cover indicate a disregard for expense and a preoccupation
with appearances. Too plain an appearance may suggest a lack of respect for the reader
and, ironically, not enough care for appearances. Rich and Gumpert recommend a plas-
tic spiral binding and a pair of cover sheets of a single color.^28 They believe a stapled
compilation of photocopied material will not be treated seriously.
The recommended length of the business plan is usually between 40 and 50 pages,
plus appendixes. Because the appendixes and supporting documentation can be as long
as or longer than the plan itself, it is not unusual to bind these supplements separately.
The pages of the plan should be crisp and clean, with wide margins and easy-to-read
type. Graphs and photographs should be of high quality, and all charts and exhibits
should be labeled and referenced within the body of the plan.
Street Story 5.3 offers some additional resources for preparing your plan and prepar-
ing yourself for writing the plan. Some of these resources will require a financial outlay
while others are free.
Free download pdf