Plan Your Business Plan

Years ago I knew a start-up company that had emerged from the research and development phase with an array of innovative products.  Apparently the products were superior to anything on the market and had tremendous potential.  But R&D had consumed millions and the company needed new funding, on an emergency basis, for an ambitious program of marketing and manufacturing.

R&D had left them broke.  They needed to move fast.

Senior officers focused all their attention on attracting private investors who would share their vision of the company.  A group of investors entered the scene.  They liked what they saw.  They had the money to invest and were ready to proceed.  They asked to see the business plan.

The most recent plan had been written several years before.  Some market research had been done, but management still had decisions to make and essential company information wasn’t available.

• How much new funding was needed?  Over what period of time?  How much control would the new investors have?  How would the new capital be deployed?
• Financial information wasn’t current and there were no financial projections.  Tax returns weren’t up to date.  The company had never hired a chief financial officer.
• The company wanted to sell products into several industry segments, but there was no marketing plan.  No senior officer was in charge of marketing.  There were only conflicting marketing ideas under discussion.

The company attempted to update the old business plan, but – lacking vital information – they ended up with something that discussed the company’s history, described the products, and speculated on their potential, but fell short of telling the investors what they needed to know.

Because management hadn’t planned their business plan, they weren’t ready when the time came.  The investors went away.

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