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The Business Plan:
What It Really Boils Down Toby Marcos Rivera
I know what you’re thinking, and I don’t blame you — “not another vague teaser on how to write a business plan.” But I’ll spare you the basics, which you can find on your own by reading sample plans and Web sites.
Through my consulting firm in San Diego, I work with dozens of entrepreneurs every week. And with the economy going south, entrepreneurial pursuits seem even more attractive to out-of-work executives and MBAs. Even now, with exceptional talent flooding the job market, I usually get one of three comments:
Now here’s a little secret — all business plans are in principle the same. We are all serving the same dish with the same key ingredients. We just dress them up and serve them differently.
In reality, most investors analyze opportunity and risk using the same framework: Is the reward (and path to get there) attractive enough and achievable enough to sacrifice my precious pot of gold? To get to yes, or even maybe, you need to hurdle over these next questions:
We all know that the investor is a tough customer with no time to squander on measly appetizers — they want the main course, and it must arrive promptly and taste delicious. To deliver, you need to know that a business plan, for the most part, boils down to the following ingredients:
1. THE MARKET
Are you going where the puck is going, or is your product yesterday’s news? Assuming your idea is on the right track, show the investor that you know this space inside and out with some metrics and trends from reliable sources. Dress these up with with quotes, articles and charts, and be sure to draw some meaningful insights. You want to elicit an emotional response. Here are a few more questions to keep in mind:
2. THE PRODUCT
Is your product or service both innovative and relevant? Show the investor that your thingamajig is not only cool and impressive, but people will spend money on it and only you can give it to them. Show them that your product or service can’t be easily replicated, and if it can be, your price must be pretty darn good or you need to have a distribution advantage up your sleeve.
Consider the following when exploring this ingredient:
3. THE BUSINESS
Putting together the whole enchilada, can you make money? Are you structured in a way that allows a quick response to market needs and competitive attacks? Truthfully, you don't know what you don't know, so you must ensure that your business model is well thought-out and flexible. This is where the plate meets the table, so be sure to have a solid plan to mitigate pesky risks. Here are some ideas to keep your proposal appetizing:
You’ve probably considered most of this already, but perhaps you’ve never fully crystallized your thoughts and your plan. If you boil it down to the above three ingredients, you should be able to construct an outline that a business consultant can help you refine. If you can’t address even half of these questions and aren’t motivated to do so, then perhaps being an entrepreneur isn’t for you, and you should get out of the kitchen, pronto.
Now if you have what it takes to cut the mustard (I mean the secret sauce that will have investors screaming “ratatouille!”) then feel comforted that investors, even in this market, have an insatiable appetite for delicious and substantial ideas. If you can give them something to chew on and smile, then have faith that you will soon have the recipe for success.
Marcos Rivera (’07) is a 2007 Rady School graduate. He has successfully launched several Internet software solutions for Mitchell International, HSBC and BMW. Rivera is the founder of Saint Rivera Group, a consultancy specializing in launching Internet-based startups. He is a Qualcomm Scholar of the Year and holds a bachelor's degree in management science and an MBA, both from the University of California, San Diego.