Business Link, describes Business Plan as a “roadmap for future development” and has an essential role for every enterprises. The document narrates “a business, its objectives, its strategies, the market it is in and its financial forecasts” and it serves several functions to business unit from securing external funding to measuring success within the business (2008).
As a statement of intent, business plan displays “where you are now and where you want to go” (Cracknell, 2006) and a growth strategy has to be incorporated to turn the business plan from a static document into a dynamic template that promote significant growth instead of survival, and more importantly, driven by people.
The section of Management Team in the business plan contains description of the roles and explicit functions of the members represented by an organizational chart that include the present force, or otherwise numbered order of people who are anticipated to join or hire with realistic allocated budget (Timmons and Spinelli, p.
243). Prudent entrepreneurs will examine during the business plan process to diagnose current and potential skills’ gaps to execute the plan.
The team is not only confined to management level, but also employees who are empowered to run the daily activities of the venture (Vecchio, 2007). The manpower budgets are guiding tool of the team structure comprising of estimates and total force needed. Identification process involves matching against the job description of each placement with induction before, during and after implementation to avoid the risk of “overtrading” during startup (Ogilvie, 2006).
Managing team dynamic is ever a complex issue between plan and “realworld”.
To VC, “ideas are a dime a dozen” and it is the execution skills that counts. A venture should begin with resumes of all people involved consisting of the past and track records of the team to ensure capability to meet the projected milestone and future success. They are concise in the business plan. Without a right team, none of the other parts of the business plan really matters (Sahlman, 1997). However, the limitation of early-stage management teams is common in a lead entrepreneur or a small group of founders in small enterprise.
During the identification process, focus on strengths of current management team and realistic outline for addition of future officers are reflected in the business plan (McLeod, 2004). The members from the management team are expected be a self-directed work teams who are able to empower employees to make decisions about their work and to help steer corporate vision (Budwig, 2008). In the business plan compilation, the key management team is identified with consideration of management compensation and ownership (p. 243).
In an investor-owned firm (IOF), the composition of the board has to be elected. The choices of the directors are troublesome for new venture and worth careful thought in the identification process (p. 345). The decision of choice is either internal or external which will start with identifying the missing relevant experience to close the potential skill gap, know how, networks and the necessity of hiring from external source. The board is likely to be comprised of mixture of executive directors and non-executive directors.
The directors are key value drivers; hence, decisions have to be objective to select trustworthy people. Accordingly, it is not uncommon that directors of new ventures are either from the founder’s team, nominated from internal source, or from internal network unless skill gaps exist or representation to bring value of credibility into the venture is essential.
In empirical study by Palliam (2005), where external funds are required, the main source is equity rather than debt in a bridged pecking order from self-funding to external equity in preference over bank finance.
This is because debts are personal liability as it invariably requires to be underwritten by personal guarantees carrying distress cost of bankruptcy. Capital budgeting and deal offers are integral part of the financial analysis section which is apparently comprehensible to the entrepreneurs who are promoters of the venture and having awareness of synergies with suitable business fit deriving from potential group of investors or institutions.
Other than cash, identify the correct investors from an ideal business fit can significantly enhance value of the collaboration in tapping into the investors’ resources of experience, wisdom and networks. Likewise, it adds “devil’s advocate” into the venture idea to identify new area of opportunity and avoidance of the mousetrap fallacy (p. 122). The pre and post money valuation are be presented to pitch and induce interest from the potential investors whose appetite differs.
However, bias from information asymmetry in the capital market (Storey, 2005) has its deterrence to identification process in convincing a greenfield project of early stage venture.
In Timmons Model, entrepreneurial team is an indispensible ingredient to potential venture and great teams are short in such endeavours (p. 91). According to Fitz-Enz, employees cost exceeds 40% of corporate expense and that people, and not cash, buildings or equipment, are the livelihood of business (2000, p. 1), therefore the drivers of the entire value chain of business are rich in human interaction.
Evidence in Manson and Stark has emphasized investors’ interest in looking for the right people “who are honest, exhibit a strong work ethic, understand what it takes to make the business succeed, have invested in their business, and have a realistic notion of how to value the business” (Mason and Stark, 2004). A business plan can set the foundation of rising new capital with subsequent profitably in operation. Those businesses that succeeded have identified the unique preposition of their products, territories or markets and have tailored programs to net results from the opportunity identified.
All these activities are performed and driven by the entrepreneurial team in the course of implementation and in most cases, supported by the right alliances from the capital market. Eventually, without the people from the team and the financial industry, the entrepreneur’s road to success is skeptical.