I'm shocked to discover that it's been over a month since my last post. I apologize. It has been a busy month. I've gotten lots of email asking where I have been and why the posts have not been coming. So I promise to return to posting regularly.
Last week I was sent a business plan that was heavy on vision and mission, but light on concrete execution plans and numbers. The topic of business plans can make a whole series of posts unto itself. However, I just want to touch on it briefly here.
Time and time again, particularly in this era of technology and entrepreneurism, I see young individuals who are breaking out to start their own enterprise. Maybe it's the first, second, or third time they are embarking on this endeavor. But if you look closely at what they write and how they talk, it is clear that they are quite ambitious and use a lot of industry buzzwords but actually lack some business basics.
What I usually recommend these types of individuals is to go back to basics. The easiest example to use is that of a retail business, much like the old lemonade stand you run when you are a kid. If you can't describe how a basic retail business operates, what kind of metrics are used, how to research and compare industry standards, then you can't honestly expect to run a grand enterprise. You need to translate those basic business concepts as they apply to your business or trade.
Similarly, you need to know some basic accounting and what general statements you need such as P&L or Assets and Liabilities. If you don't know what "Gross Profit Margin" means or what your industry standard is, then you need to get a clue.
Believe it or not, the SBA actually has a decent guide on how to write a business plan and goes over some accounting and basics. If you don't have at least this level of information mastered, then you should really not embark on raising money.
Having a smart accountant or attorney that charges $400 an hour is great, but it doesn't make you a better entrepreneur. When you approach your funding source you really need to have all of this together and be prepared to show some depth of knowledge much like you would defend a dissertation. Otherwise, the person will not be impressed.
Click here for the SBA guide.
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