How to Evaluate a Business Plan by Evangeline Marzec - Updated September 26, Whether you're an investor, an entrepreneur or a business skills teacher, you'll be exposed to a wide variety of business plans and should have a solid, somewhat standard approach to evaluating each of them.
A good plan violently executed right now is far better than a perfect plan executed next week. Patton At InSite, we see many business plans. We are finding that many companies have similar weaknesses in their business plans, and consequently much of our feedback is repeated.
Never doubt that a small group of thoughtful committed people can change the world. Indeed, it is the only thing that ever has. Margaret Mead The Team The most critical part of a business plan is the people. If you spend any time at all looking into how young companies emerge and grow, the key aspect of this success is the "team".
Working with companies particularly in times of significant challenges or funding, has refined our definition of what constitutes a good team. They understand a great deal of the details of the company, but also understand the larger strategic issues and the conceptual framework of the organization and its business processes.
Working through tough problems in a positive way is important. We recently saw this well demonstrated in an early stage company. Within the meeting, the outsider to the company challenged several very core ideas of the business concept.
In many, perhaps most, settings such a direct challenge of the intellectual foundations of the business would have been divisive. However, the people that the entrepreneur brought to the table were all first-rate, and they had enough self-confidence to listen well and think about the ideas expressed.
In addition, the entrepreneur was absolutely unflagging in his desire to find a pragmatic solution to the problem, welcomed the external challenges, embraced the debate, and expressed a very natural enthusiasm that greatly aided the discussion progress.
While what ultimately happens to the business has yet to unfold, we have a deep confidence that the entrepreneur will ultimately assemble a highly qualified team that will be cohesive and rapidly work through problems.
A strong work ethic, to the point of almost pathologically working, is imperative in the early phase of companies. Perhaps even more disturbing is observing a hiring trend where the CEO is surrounded by junior people.
While this makes for peaceful staff meetings, it invariably leads to the situation where rigorous debate is sorely lacking, resulting in lackluster problem solving. Senior Staff The exact composition of the senior staff will depend upon the industry and the skills sets of the individuals that comprise the senior staff.
As an easy example, if the CEO is a former chief financial officer CFOit is not necessarily required to have another extremely senior financial person on the staff initially. For the purposes of our discussion, we will talk about the general capabilities that the staff needs without addressing the exact titles that the team members may have at this early stage.
Financial and Company Data Many, if not most, of the small businesses we see do not have a finance person as part of the core team. This is very understandable in that often times the role of finance is seen as just keeping the books and implementing simple spending controls in the company.
This confuses the role of finance with that of bookkeeping. Developing this financial sophistication is not an easy thing to do. It used to be considered that one of the best paths into the CFO chair was to "do your time" in just about as many different financial functional areas as possible: In addition to the financial functional areas, any time spent in operational functions was great experience.
This by default, meant that by the time someone got to the CFO level, they had many years of varied experiences in continually expanding roles of responsibility.
This provides the ability to determine which data are relevant and derive insightful conclusions about the new venture. One of the assumptions that we at InSite operate under is that a good CFO has responsibility for more than just "reporting" the numbers.
And everyone hearing this will nod in agreement and say "of course".How do you differentiate good business investment opportunities from bad ones? Do you want to learn how to evaluate a business opportunity? Then i advice you read on. Toggle navigation Menu. Business ideas; Writing a Business Plan – How to Plan Your Exit Strategy.
Writing a Business Plan Executive Summary – Sample Template.
Evaluate the business plan as a whole document, and as a reflection of a real-world company. Determine whether the market need is adequate, the company's offerings are compelling, the management team experienced and committed, and the financial statements realistic.
Strategic Planning Process: Evaluate Your Strategic PlanDoes your plan connect your mission to your vision? Make sure all of your goals and strategies align with your vision and supporting your mission.
Is your plan integrated? Make sure that all the elements of your plan support each other. Is the document clear?. When potential lenders or investors review a business plan, they are keenly aware of the risk/return tradeoff: the greater the risk involved in the venture, the greater the return demanded.
In short, while it may not make sense to immediately hire a sophisticated financial expert, a good business plan needs solid, and fairly mature, analysis of both financial and market data.
In short, even young businesses need access to strategic financial thinkers. What Goes into a Business Plan. Load more. Business; Start a Business; Business Plans; 10 Ways to Evaluate a New Business Idea; 10 Ways to Evaluate a New Business Idea.
If the business requires plenty of personal contact, for example, are you good with people? If the business requires you to move rapidly to seize an opportunity, are you.