Category Archives: Small Business Funding

Seven Attachments That Make Your Business Plan More Credible

Business planning workshop participants often ask what sort of attachments should be included with their business plans.

From a high level perspective, a business plan is made up of three main parts: narrative, financials and supporting information. Supporting documents are best attached as appendices to your business plan.

The appendix is where you will place any detailed or complex information that supports all those amazing claims made in the narrative and financial parts of your business plan. The narrative or body of your plan is where you’ll tell your story, and it must be easy to read. Any back-up documents or items that would disrupt the body of your plan should be tucked instead into the appendices.

Here are a few of the most likely documents you should attach to your business plan.

1. Resume. A resumé is a concise inventory of your personal experiences, your educational background, and any personal information that adds credibility to you as manager or owner of the proposed business. It’s an opportunity to highlight your strengths and show how your work experience increases your chances of success.

2. Certificates and Accreditation. Provide any certificates and accreditations that will build your credibility as owner and manager of your proposed business. In doing this, you’re best not to overdo it, just include the certificates most relevant to the business you’re planning.

3. Historical Financial Statements. If your business plan is for an existing business or if you’re planning to buy a business, you’ll want to attach enough financial history to show whether the business has been earning or losing money.

4. References. If you’re starting a new business, and particularly if you’re looking for financing, a list of references or a few reference letters will add strength to your case. Be sure any letters are up-to-date and that those providing the letters are aware of what you’re using them for. A supporter forewarned will be better primed to give you a rollicking good reference, if she gets a call from the lender.

5. Validation of Sales. For a going concern, a list of paying customers enables the reader of a business plan to evaluate the strength and quality of the customer base, and therefore the enterprise’s sustainability. Start-ups with no sales to tout will use other types of validation, such as letters of intent, expressions of interest, or comparisons to similar businesses.

6. Market Research. If you’ve gone to the effort to survey potential customers, you will want to summarize your findings and attach them to the business plan. This is also a place to include items like demographic tables or articles that add credibility to your business case.

7. Legal Documents. If you’re getting into a partnership, you might wish to attach a copy of your partnership agreement. This appendix might also include contracts, lease agreements or any other relevant legal documentation.

When deciding what to include as supporting information for your business plan, keep the target audience in mind. If the plan is for a banker, ask what he or she needs in order to do the due diligence on your plan. While most professionals will want to see the items above, it’s equally true that each person or group to whom you submit your business plan may request a slightly different mix of supporting information.

The key to successful business planning is to do your own due diligence, to ask each person you submit the plan to what supporting information they need, and then include the documents they want.

Are You Ready to enter the Dragon’s Den?

Money-Dragon The Dragons are coming to Prince George, BC on January 25th. Are you ready to make your pitch? The following are tips I’ve gleaned from watching the Dragon’s Den and Shark Tank programs. Each time the Dragons come to town a lot of entrepreneurs dream of running the gauntlet. Here are a few things to take in consideration before sauntering in to pitch the Dragons.

  1. You’d better have a product or service to sell. Take a page from the Kevin O’Leary School of Business – 1) Get a patent 2) Sell the patent 3) Collect royalties for the remainder of all time. If you’re selling unpatented widgets that can be copied and replaced at one tenth the cost, you’re going to agitate Mr. Wonderful and bring down thunder and abuse. Not what anyone hopes for when tiptoeing into the Den.
  2. Do a realistic valuation of your business. Pie-in-the-sky valuations will only bring disappointment and get you laughed out of the Den. The Dragons have seen a lot of pitches. You’re not going to fool them, so don’t even try. Here’s how the valuation relates to your ask. If you are looking for $250 000 for 50% of your company, you are essentially setting the value of your business at $500,000. Wild-eyed valuations foreshadow what it would be like to work with you. While you don’t want to sell yourself short, an inflated valuation will turn off investors.
  3. Don’t enter the Den without a dollop of sales under your belt. Prove sales before going under the microscope. From all I have seen, you will not get a deal unless you have some sales under your belt. Profitable sales are even far more enticing. And those sales had best be to real customers (no, not your Mom), as in people who don’t eat Christmas dinner with you.
  4. When the Dragons are talking, shut up and listen! Many times we’ve seen Dragons backing away from a deal because the entrepreneur is talking instead of listening. Why is this important? Well, the Dragons are aware that getting into a partnership with you means they’ll be faced with communicating with you on an ongoing basis. If you can’t listen, you’re probably not going to be a lot of fun to partner with. Besides, the Dragons have a lot of wisdom to share and you’ll miss if you’re trying to do all the talking.
  5. Answer the questions they ask. There are times to be evasive. There are times to hedge your bets and dodge around the answer like when your Mother and Wife are both staring at you from across the dining room table, wanting to know who’s pie you prefer.  There’s no room for evasiveness in the Dragon’s Den. Answer all questions, clearly, directly and concisely.
  6. Be available and plan to do the work. The Dragons have spent a lot of time acquiring wisdom, filling their coffers, and building powerful networks. The lesson? While it’s noble and courageous to work at a full-time job and build your business on the side, the Dragons aren’t looking for jobs, they’re seeking investments that make money. Make sure your plan includes payment for you to jump in and manage the business. The Dragons are selling the knowledge and funds and connections to make things happen fast. They’re not going to build a business for you; that’s your job.
  7. If you’re headed into the Dragon’s Den to sell a mere idea, you’re headed for disappointment and a bit of a thrashing. Ideas are two bucks a ton. Don’t consider yourself ready to meet the Dragons until you’ve at least got a working prototype.
  8. Know what you want from the Dragon’s going in. If you really just need the cash, a bank loan might be what you need. If you’re looking for the expertise the Dragon’s bring, think about who you want to work with. Do you need franchising help? Marketing help? Distribution? Know which Dragon’s you want to work with. Be courteous when turning down offers. Don’t be rude, even to Kevin. It will reduce the other Dragon’s desire to work with you.
  9. Choose the right business model. You’re going to hit a brick wall if you wander into the Den thinking you’re going to build a franchise business when all you really need is to connect with the right distributor. This comes back to knowing your product, your customer, the industry and your competitors. Dare I suggest that you need to do some business planning?

The Dragon’s Den is pure entertainment, usually fun, sometimes painful, always a learning experience. I admire those who have the courage to step into the ring. I’m always rooting for the applicant and I wish success and prosperity to all who take the risk.