I was asked in a radio interview what was the most important piece of advice I could give anyone starting a new business. Of course it’s the business plan and everything that goes into it. Anyone, however, can fill out a Business Plan template that they can easily find on the internet. So before writing the great Business Plan in you, consider the three most important factors that must precede putting your plan down on paper. If you lack them, your business may have issues that a business plan won’t fix. A wise man told me if you want to be a successful Startup Company you need three things:
1. A great product
2. Great people
3. And Enough Money
The theory is if you have any two of these three the third is easy to attain. I’ve been to angel investor meetings where a supposed strongly vetted business has reached the point where they need capital to expand. They have been checked out, investigated and their product has passed the ‘sleep test’ (if you can go to sleep at night and not worry about the product it’s ok). Yet as soon as the CEO opens his mouth at the angel meeting you know the plan has failed to live up to expectations. The opportunity and the deal are gone. Startup CEO’s may have some vision, they may have potential and they may have courage but they are always blindsided by the reality of being in the startup phase without the maturity or knowledge to take that business to the next level. Poor management will always fail.
A startup business tends to have as the CEO, one of two people; the visionary who conceived the business and is completely hands-on with his baby. Nothing will get in this man’s way; not even incompetence. People call this CEO-itis because they may have a brilliant idea but may not have the skills to implement and oversee it but stay on as CEO nevertheless. The second CEO is the mature, skilled person with experience vetted by the brilliant visionary and owner of most of the stock. Along with his advisors they have found and hired the person to lead the new business. I’ve seen Venture Capitalists sigh when the Business Plan presentation suffers from mediocrity because the company leaders believed their flawed business plan. I’ve been there and yes have done that! If you have a great idea with little money seek out credible people who are mature and experienced. People who believe in your vision but also have confidence and have experience so they will be honest with you and who will tell you the truth about your business. Imagine all the money in the world with a good team, and a product no one wants. Yikes! I was fortunate to have had the best scenario – a great team and a great product. Visionaries, angel investors, banks and venture capitalists with vision will always see the wisdom of investing in this business scenario.
This growing enterprise will always find the money to implement the business. Don’t follow your ego when someone questions your business acumen. Seek counsel and consider the future of your enterprise and remember the three cornerstones of success- good people, good products and money. In my next blog I will be discussing the absolute necessity of having a conservative, honest and thorough business plan.