Siyavuya was introduced to me by a friend at GIBS. He was in the process of seeking funding and the common friend thought it would be a good idea for him to sit down with me to see if I could assist in any way. We met (over coffee of course) and I proceeded to completely and utterly disintegrate his business plan on which he has been working for a while (Siyabuya: I am so sorry!). Below is his version of the business plan murder in the hope that it will be of use to other entrepreneurs and would be entrepreneurs. As you read this please remember that my feedback and suggestions are just that: suggestions and perfectly biased ones at that. Different people will suggest different things and all of them are probably right. As with all things in life, absorb all feedback but then decide for yourself what works for you and what doesn’t.
As always, I hope this helps. And as always, a big big round of applause for the heroic entrepreneurs and would be entrepreneurs like Siyavuya who are rolling up their sleeves to become master of their own destiny.
You can find him on twitter @wired112
Aspiring Entrepreneur – Business Plan Writing Skills
Hello My Name is Siyavuya Cingo. Today (Wednesday 12 March 2014) I am going to tell you about an interesting meeting I had with a gentleman by the name of York Zucchi this morning.
A common colleague of ours arranged the meeting and the aim for the meeting was for me to present my business proposal on a start up venture that I have been working on for the past year. In Return Mr. Zucchi would view it and refer me to potential investors
I have been a businessman for the past 10 years, I have had four businesses and three of them went under. I’m currently working on my fourth venture and it has been a lot of learning curves but let me tell you I am doing what I love and I wouldn’t trade it for the world. I have a Diploma in Business Computing (IT) and a certificate course in Property development. I’m also currently studying towards my degree through Unisa.
I compiled a sound business plan with projected income statement, balance sheet, cash flow projections and forecasts with a five-year plan. The business plan took me two months to put it together and I felt it was ready as ever, to my surprise Mr. Zucchi shredded it into pieces.
What am about to tell you are very important tips that I learnt today, that could save you a lot of time if you are an aspiring entrepreneur and are looking for investors to fund your project.
Now there was nothing wrong with my proposal it just lacked life and it looked generic and boring. It is a 65 page long proposal.
There are 13 crucial points that you need to look at when presenting a proposal to a potential investor
- THE EXECUTIVE SUMMARY: Start off with a 2-page introduction page – the kind of overview that at a glance gives the busy reader or potential investor a full overview of all aspects of your proposal. Remember that the people you are sending it to usually are stretched for time and you are competing with other business plans. In these 2 pages you must fit in all the products and the reason for this business. You need to get the investors attention and interest here, so make it colorful if you wish. BUT BE BRIEF, SIMPLE AND TO THE POINT!!
- THE SOLUTION YOU ARE PROVIDING: Every Proposal is really about a solution that you are providing to solve a business problem. When you solve a problem, companies will pay you. Hence make it clear what is the problem and what is your solution (York: if you can’t explain your solution in terms of solving a client need’s, how are you going to persuade customers to buy your product or service?). Max 1 page. Include graphics if need be.
- THE MARKET: 1 page max describing how big the market is and what is realistic for your to achieve. Maybe break it down over multiple phases… you may even include that to get phase 2 you might require additional funding (of financing of equipment, etc, but that is easier once you have a track record). Steer clear of telling the investor how big the global market potential is – they are nonsensical numbers. In this phase of business the investor is interested in the realistic potential market is that you can target. You can include if there are specific trends in your market, but always write from the perspective of how does this add value to the business proposal.
- FINANCIALS: Breakdown of the capital out lay of the plant or equipment needed to achieve this project, so make a shopping list and pricing. Every investor wants to know where each and every cent of his money is going. Be clear and specific. Put picture of the equipment make it live if you feel it helps (York: in this case, as the proposal is about heavy industrial equipment I suggested putting pictures of the equipment being bought with a cost next to it and the role this will play in the business – think of it like the menu of a restaurant. This list also allows the potential investor to understand what part of the investment will be used for running the business and what for buying items that should be business not succeed can be considered as assets). 1 page max (essentially a summary – and include all the background spreadsheets at the back). Be realistic. Make out three scenarios in graph. Optimistic, real and worse scenarios. The investor needs to see that you have looked at all possible angles. You are not selling a pipe dream
- THE TEAM: A brief background about yourself and your relevance to the project, and how much you are sacrificing to make this project a success. The Investor has to know how much skin you are putting in the game. At this stage of your business the company is you so hold off from referring to yourself as the Ceo as if someone else wrote your proposal. Sell you, this business is you. Also include any other team member and how their experience and education contribute towards the success of the business (e.g. high school or whether you know how to use microsoft office really don’t count – they are assumed. Include skills and experiences that reassure the investor that you will be able to run the company, incl bookkeeping skills, etc). You want to tell the potential investor who is in the team and their relevance to the project? The investor will scrutinize this point as you might have a great idea but with the wrong team. Break down of the team and their experience on 1 page max. Include photos if you can.
- CORPORATE GOVERNANCE: Set Up a Board (or know what your board would be composed of): you are telling the investor that you have people with experience to help you and guide you and hopefully prevent you from making big mistakes. This will put the investors mind at ease knowing that you account to experienced business people. It will also add value to your experience in business. Again, max 1 page with photos.
- MARKETING: Marketing is about what you are going to do to get clients. Be practical and break it down to the core, set time lines. You need to show the investors how you are going to bring in clients. Show access to networks and other potential partners relevant to the project. That you will be doing a website, business cards, etc, is a given. The investor wants to know practically what you are going to do to get clients in a way that persuades him/her that you will be successful. 1 to 2 pages max.
- CLIENTS AND RELATIONSHIPS: Being a start up, it is essential to show any rapport with potential clients. It could be in the form of a letter, a list of people you have presented the idea to (prospects) and what their reaction was, it could be about an informal survey you did, etc. You are telling the potential investor that you didn’t sit in a room and dream up the interest in the market, but rather went out and tested the idea in the market (including pricing ranges, delivery times, expectations, etc). Also a good idea is to include a timeline of your client acquisition (and no, you will not get 100 clients in the first month because things will go wrong and you will spend the first months on just 2 clients fixing and finetuning the solution. 1 page. Maybe 2 if you are giving really interesting feedback.
- TIMELINES: You need to set time lines for the project from inception to when the investor can expect money in his account. Be clear and practical. If you are not good at creating it digitally then draw it on paper and scan it. Make it easy to understand. It could be March to July – installation of pilot client, 2 staff. August to Dec – bring in and train 3rd staff and tackle new clients, etc.
- INVESTOR VALUE PROPOSITION: Investors need to know what their annual return on investment will be. Make it worth their while to invest in you. As much as they may like you as a person, if the returns to them are not worth it they will not invest of their investment mandate will not allow them to. And don’t tweak the numbers to please the investor… it is a recipe for disaster. 1 page.
- RISKS AND OPPORTUNITIES: Breakdown all the possible risks involved and mitigate with opportunities. 1 page.
- OTHER: BEE, Jobs creation and innovation, impact, etc. 1 page.
- Remember that you are not getting married with this proposal… this is the dating phase of your business. If the investor is interested that’s when they will start the full due diligence and that’s when they want to see the 65 page business proposal.
I thought I could share this bit of information that I gained from York today and I will certainly apply it to my proposal, so this is me going back to the drawing board