Creating Value: Finding Balance In Your Business Plan
EBMS: Business Plan Development
By Trevor A. Johnson
August 29, 2010
Guy Kawaski is a venture capitalist out of the fabled Silicon Valley. He is also noted as being one of the Apple employees originally responsible for marketing the original Macintosh computer in 1984. Today he is currently the Managing Director of “Garage Technology Ventures,” which is a venture capital firm specializing in high-technology start-up firms out of Silicon Valley, California. He is also a well-known blogger for his blog “How to Change the World.” Which is currently ranked in the top 2,000 most popular globally.
Jimmy Lewin is a Principal Consultant out of Phoenix, Arizona. His background includes over 35 years in international, commercial and investment banking, and also nearly a decade as the principal shareholder and CEO of a rapidly growing manufacturing and distribution business in California. Today Jimmy works with early stage technology entrepreneurs and serves as advisor and consultant to entrepreneurs regarding business planning, capital markets and funding strategies. For the last two years Jimmy has served in capacity of President, Director and CEO of Guardian Bancorporation in Los Angeles, California. He is also an aspiring blogger on money and investment matters.
From the readings what I was able to take away was that investors are ultimately looking for value with business plan. I say looking for value in that; “is the idea you’re trying to sell worth the potential risk involved?” “Will it make money?” “Do consumers see the value in your proposition?” “Is there a need for ‘it’ in the current marketplace?” Investors, whom your business plan is ultimately geared for, want to see value.
Kawaski advocates that you should “Perfect your pitch, then write your plan. Keep it short: ten to twenty pages. Spend no more than two weeks writing it. And don’t get obsessed with details in your financial forecast because it should be one page long” (Kawaski, 2007). As Kawaski points out in his blog “How to Change the World, Is a Business Plan Necessary?” in quoting William Bygrave, “What we really don’t want to do is literally spend a year or more essentially writing a business plan without knowing we have actual customers, just do it” (Kawaski, 2007).
Lewin I found tends to focus his thoughts on a more generalized appraisal methodology. He states that ideologies such as “hard numbers such as historical profits, assets, cash flow and liabilities are always important in determining the worth of a business” (Lewin, 2010). Lewin also mentions, “Soft figures, such as income and cash flow projections can be very important to a buyer or investor interested in the company and Intangible assets, such as patents, brands, quality or reputation of management, location, recipes, processes, technology, customer lists or goodwill often have a hand in determining the over value of business” (Lewin, 2010).
These two schools of thought are centered on the investors or venture capitalists, which is who the art of crafting a business plan is meant for. The one thing these two experts both noted is that the chief objective of one’s business plan is to create value from the proposed business concept. Without value or a compelling need to begin the business, “a great plan won’t make a lousy idea successful, and a lousy plan won’t necessarily stop a great idea” (Kawaski, 2007). Thus both experts focus on the idea that the true aim of business plan is create value within the proposed company.
As for the pitfalls that are commonly seen with business plans both seemed to agree on the notion of the overly detail, longwinded version of a business plan is a sure way close many doors to willing investors. As Kawaski says, “It is a tool—one of many that may help you get funded (or, more accurately, hinder you from getting funded if you don’t have one) and may help you get your team working as a team. But it is not an end in itself” (Kawaski, 2007).
Lewin’s dissertation was somewhat more detailed than that of Kawaski’s, but the component with each is that there are many differing factors, which need be taken into account when considering what it is that an investor will gravitate towards when considering a potential investment.
Now as far as my business plan is concerned I plan to make use of these various tips for the crafting of a successful business plan. One thing I will most certainly look to improve upon is the length and indirectness of my wording. There is obviously no place for lofty ideals to be placed within the confines of a successful business plan. To that end though, I found it reassuring when Lewin mentioned the fact that certain intangible assets, such as goodwill do in fact play a major role in determining the potential value of a business.
Also I intend to take Kawaski’s advice when he advises that one spend no more than two weeks writing the plan and that it is best to keep it short and to the point. Crafting the value we intend market to the consumer should be our ultimate goal when drafting our business plans, therefore keeping our plans short and concise will serve as my best course of action. As pointed out in the Kawaski blog, “there is no compelling reason to write a detailed business plan before opening a new business.
I also intend to focus more on the idea of perfecting my pitch and then writing my plan. I feel this gives me, as the potential entrepreneur, a more streamlined approach with which to focus my efforts on. If the basic ideal or company mission is clearly laid out in my mind, then delineation from that concept will be that much harder to deviate from.
The fact is my integrity and character must come before anything else. I also aspire to demonstrate these same ideals with my business model as well. And therefore the same can be said for the crafting of my business plan. I would like the business plan that I am writing and crafting to mirror my ideals as a human being and father. For myself, it’s all about continuing to do the next right thing, and I would want my business to implore that very same ideal. This is where I see the most important aspect of my business plan coming into play. If I am crafting a business plan for the allotment of funds from an outside investor, I want that business to based upon the ideals for which I so stand. I want to create value within my business plan. I want to create value within myself. The idea that one needs to generate potential value with the business plan is apparent. And therefore it is safe to say that one must also generate potential value with his life in order to be regarded as a success.
Works Cited
Kawaski, Guy. (2007, January 22). How to Change the World: Is a Business Plan Necessary? Retrieved from http://blog.guykawasaki.com/2007/01/is_a_business _p.html - axzz0y3uMhZpT
Lewin, Jimmy. ( 2010, January 28). BizPlanIt: What’s the Value of Your Business? Retrieved from http://www.bizplanit.com/blog/whats-the-value-of-your-business-part-1
