Every experienced entrepreneur knows that her business plan needs to be captivating, winning, attractive: basically, the next best thing since sliced bread. Sadly enough, according to recent statistics, 9 out of 10 start ups fail. Brad sits down with Shachar Tal, a successful entrepreneur from the start up nation, who agreed to explain what exactly he is looking for, when examining a business plan.
B: Shachar, you put a lot of emphasis on peer entrepreneur review. Why is it so important to let another entrepreneur look at your business plan?
S: Let’s put it this way: how much would you benefit if you knew that your business plan was reviewed and evaluated by Mark Zuckerberg, or Bill Gates, or any other successful entrepreneur? How much would you weigh their tips and advice? What is the price tag you’d put on an evaluation from a successful entrepreneur who has been in your shoes and managed to succeed?The collective experience of successful entrepreneurs is not something to belittle. I myself have had my ideas go through successful entrepreneurs and I can say that at least once I was spared a year of futile actions, because of good advice from successful entrepreneurs.
B: But most can’t find a successful entrepreneur and when they do, I do not believe someone would have taken the time and energy to seriously evaluate their business plan.
S: Very true. These guys, we, are busy. We have a lot on our minds and cannot afford the distraction. Usually, that’s why consultants are for, and you can get your business plan consulting from a good consultant, but most aspiring entrepreneurs I know cannot afford one (by the way, good luck getting a quote for less than $100k from McKinskey & Co. or their peers), so what do they do? They go with generic tips and internet templates, do a bad job because every business is unique and the templates don’t do the work for you, and usually fail.Although there are more than enough consultants, some very good, who would do the business plan for you, or with you, there is a real shortage of quick evaluation services, like having your business plan reviewed and by a person who have been in your shoes and succeeded.
B: So what do you do if you’re an entrepreneur, you don’t have any money or connections and still want validation on your business plan?
S: Well, the first advice for an entrepreneur without any peers to benchmark with would be: increase your network. Go to entrepreneurship events, subscribe to entrepreneurship groups on LinkedIn, find meetups, because clearly – your network is lacking these crucial members.Second is, when you do find an entrepreneur who is willing to help, try to arrange a meeting with them and be very specific – focus on a dilemma that’s bothering you or a market niche you’re keen on marketing to. That way you’ll be effective and you’ll signal to the helping entrepreneur that your idea is pragmatic and focused.
B: What do you do when you’re on the end of the table that’s giving the advice? What are you looking for in business plans that you think stand a chance?
S: There’s a bunch of stuff. To go over them would take me a day more or less, so in a meeting I’ll try to focus on the one or two most important issue, for example:Checking whether the entrepreneur had correctly assessed the need for the product/service, and if they didn’t – what they should do in order to present a convincing need that will attract investors
Checking whether there are any technological/feasibility/marketing/other issues that may seriously conflict or hinder your chances to succeed with the entrepreneur’s idea
Checking whether the entrepreneur had missed some obvious drivers or barriers
Checking whether competition was analyzed in a satisfactory way, and if not – what should he entrepreneur do in order to present a good picture of the competition
Seeing whether he entrepreneur’s offering is truly differentiated from the competition, and if not – I will advise on the direction he entrepreneur should take in order to do so.
B: Are there things you will not do?
S: Yes. I’d probably not go over the financial calculations or the market research method, and of course – phrasing or other presentation techniques. Actually, bad grammar, ugly presentation, use of bad English etc – if it’s too excessive, of course, not the occasional typo here and there – actually bring me down. It is depressing to evaluate a presentation where it feels like the entrepreneur has done a poor presentation job, or just didn’t try that hard.