Having a great idea and singling out an opportunity is only the very first step of entrepreneurship. The next steps need elaborate planning outlined into what is known as a business plan. It is a document that evolves an idea, in the early stages of its infancy, into an opportunity worth investing.
Taking our succession of discussing the various sections of an effective business plan ahead, having talked about executive summary, company’s background and its goals and objectives, this week we will shed light on the section describing a start-up’s management team.
Once considered a conventional practice in the corporate arena, business plans today are aimed at obtaining financing and forming alliances. Not only do these business plans demonstrate competence, they also convey an entrepreneur’s drive and determination to succeed. While all the other sectors of a business plan are also important, the significance of the management team section cannot be denied.
Despite the enormous impact management team has on an investor, many executives fail to articulate the company’s vision and the prospects it has to offer. This section of the business plan is of grave importance as it allows investors and venture capitalists to comprehend how the ownership of your business is structured.
Those reading the business plan are not only concerned with how ground-breaking or earth-shattering your idea is. They also take into consideration the management team and expect them to be good stewards of the capital they are putting into the company.
Many investors consider the management team the most important predictor of a successful business. This section often serves as the elementary criteria that allow investors to make up their mind about whether or not it is a good idea to invest in your company.
The quality and capability of a management team comes into play because of a prevalent belief in the venture capitalist industry which establishes that the best of plans may not bring the desired results if executed by a weak team. On the other hand, a poor plan executed by an eminently qualified team can still work wonders.
Investors always expect a well-rounded team with competent individuals with expertise and experience in every area critical to business. A good team is a highly sought-after quality by investors as only one will be able to identify weakness and guarantee timely execution of plans.
It is, therefore, of paramount importance that this section of the business plan captures the essence of the management team, communicating its strength and potential and convincing the concerned parties that those on the team can contribute elements that are vital to entrepreneurial success.
Investors want to align themselves with management teams who they believe have the aptitude to execute the outlined strategies in the desired manner. This section of the business plan goes well beyond just a rehash of resume-type information. It should incorporate the background and qualifications of the key personnel, this includes those that are part of the team as well as those who have yet to join.
The management team section of the business plan should also spell out the qualities and attributes of individuals the company plans to appoint. Since previous experience and prior success is highly valued by investors, make sure every player’s experiences are outlined in great detail, especially if they are with start-ups.
Since the management team should give the readers an idea that the team is that of a group of winners, every individual’s domain expertise should be eloquently specified. Investors will appreciate a track record of useful and relevant details in this part of the plan as well. It is important to specify here a player’s involvement in one or several failed attempts do not matter, it is the experience acquired that is the bottom-line.
While one may find it hard to believe, investors often take failures as prerequisite to success because they know a failure helps one to realize any shortcomings the plan, idea or strategy had and that entrepreneurs make sure they avoid them the next time around. Entrepreneurs, therefore, should not shy away from discussing their successes or failures in this section.
One thing that is often overlooked is that this section of the business plan should communicate how the individuals on the team will make a cohesive and integrated team. The business plan should give the investors a clear picture of how the team will shoulder the responsibilities and stress the start-up is bound to face. Any individuals with complementary skills should also be highlighted.
In a nut shell, management team section of the business plan should help investors focus on the technical qualifications of the team, their entrepreneurial experience and integrity while effectively articulating their strong drive to succeed.