There is no particular way or matrix that can define this but it is left to the individual / team to assess his or her (or their collective) mental strength. While one cannot predict what is expected during the course of a business cycle, it is better to prepare for extreme eventualities. Much as we may plan and get into great detail of explaining every aspect of a business build up or growth, it is unlikely to remain a pattern that one would have envisaged. Setbacks in businesses are common. A well-prepared individual or team leverages on case studies, mentors, advisers, board members, family, and like-minded peers to find ways to come out of every situation.
Ability to listen
This may sound obvious at first but this is the missing element in several entrepreneurs and business heads that I have come across. People with experience come with a bunch of presumptions – well, right in a way as they would have seen or been a part of a number of cycles. But, every new venture or business idea may have certain nuances which may require a fresh understanding. This necessitates a good number of conversations and accommodating viewpoints, suggestions, and wide ranging inputs. In fact, the first 18 - 24 months makes one learn and unlearn several new dimensions that have the power to alter the course of the business in more ways than one.
The passion to sell
Any new venture or project requires relentless selling. To sell isn’t about a great presentation but involves the aspect of arriving at a win-win situation with every customer or internal stakeholder. One has to go great lengths to find a proposition that is viable, value-based and profitable. It requires one to seek inputs, research, and suggest a solution that fits in to the ‘critical need’ slot of any buyer. The person handling the venture or project is the best salesperson one can find. It is important to be eager to hit the road.Period.The points aren’t exhaustive but are critical enough to make a good beginning.
This is brass tacks of the plan - the preparedness to cover every aspect of the business or venture and make an idea or concept look convincing.
Research, research, and more research
Dig into everything that can add some dimension to the plan. The markets, the competitors, the perceived need, views of experts, reading, and attending conferences that have some significance to the plan. This should translate to a crisp note on the situation that exists today and pave the way to suggest why the product / concept in question is going to be immensely relevant.
Define the venture
The research should lead to a neat definition which speaks of clarity of thought, and the way forward. It can elaborate on the benefits to a buyer and what aspects of one’s life or business is likely to change with a significant positive outcome.
There is a cost to everything
What does the venture cost to build or bring to market. This section requires a huge amount of detailing. Every cost should be fact-checked with current market prices, vendors, credit period, lead times, duties, restrictions (if any).
Revenue is the motivator
How do you plan to sell and at what price point? Is this viable? Has research thrown up any vulnerabilities? What volumes are being considered and at what growth rate?
Cash in, cash out
The numbers finally boil down to the cash flow statement. One has to be as detailed as possible in recording every penny that is expected to go out or come in. Multiple scenarios of revenue growth should be considered as a pessimistic view, realistic view, and optimistic view. The cash required to fund the business on a month on month basis should be determined. The break even point should match the expectations of the head honchos and investors.
How long do you linger?
If things don’t go as per plan, one should know when to alter the course of the business or take a firm decision. This warrants several check points at a quarterly level. Remember one thing that is good to businesses cannot function on hope and prayer or insensible optimism.
Understand the risks involved
The concerned investor (internal or external) should get a feel of this and commit to the project after fully understanding the risks involved. Nothing should come as a shock or surprise
Often ignored in most plans but has caused immense pains to several businesses. Government regulations can stall projects for months or years. Having a sound understanding of the rules and regulations becomes essential to the plan.
In the end, it is all about people
The team is what an investor trusts. You cannot fool proof a business plan beyond the 65-70% range. Considering you have the 30% vulnerability, the team - their ability, exposure to different facets of a business, skill sets, and how well they bond makes all the difference to tilt a decision in one’s favour.
The investor is keen to know who will call the shots. Is he a person who can bet his own money on the venture? The answer to this has many a times been a make or break for a deal.Working on Part B without preparedness for Part A would be hard work in vain. Many examples in the corporate domain have suggested this and vehemently so. But, it is often ignored.
Suresh Ramakrishnan is the executive director at Trinity Academy for Corporate Training, the investment arm which acquired the print division of CMS IT Services. He is involved in giving the printing entity the impetus for growth.