Q: I'm currently in the process of writing a business plan for an Internet company. I'm looking for financial backing, and after doing some research, it seems that I really need a proper management team in place. Unfortunately, my team currently consists of myself and just one other person, and we have the same skills in the software development field. Can you give me any advice?
A: Consider the investor's point of view. Most investors see dozens if not hundreds of business plans each week. Virtually every business idea imaginable shows up several times each year. Even within the mere 50 plans I see each year, most ideas repeat.
So if your idea isn't going to distinguish you to investors, what is? Your team. An investor learns about your team in many ways. The most obvious is from your team bios. As I'm sure you know, if you have a team with 50 years' experience in the industry you're tackling, you'll be much more likely to get funding.
If you don't have a well-credentialed team to showcase, however, another way to shine is through your plan itself. The quality of your writing, the thoroughness of your plan and the logic behind your business model all demonstrate your team's abilities. The better the plan, the more likely it is investors will take a bet on the folks who wrote it.
Pay a lot of attention to the marketing and business aspects of your plan. These areas will help give the investors faith that you've identified a product with real business potential. Who will buy your product? How will you reach them? How much will they pay? Why? The best marketing analysis I've seen was from two undergrads with a very small idea. The idea was small, but they understood their market inside and out. I didn't invest, but I did walk away with enough faith in the team that I'd invest if they presented me a solid marketing plan for a bigger idea. Their plan convinced me they understood their business opportunity.
If your idea and technology are fairly far along, it's feasible to approach venture capitalists and make it clear that you'd like to bring in an outside management team with their assistance. Especially if you have patents, a strong technology can sometimes carry the day when raising money.
If you decide to build a stronger team, pick and choose carefully. Look at the quality of the people you know and can likely bring aboard. Decide how much time and effort you can afford to spend assembling a team prior to funding, and at least try for a top-tier businessperson. Sometimes an endorsement from a well-connected source (a well-known college professor or prominent businessperson) is enough to let the funding sources know you should be taken seriously.
You can also supplement your team with a strong advisory board. If you have advisors with big enough names or with impressive track records, experience and contacts in the right industry, or, they can serve as a proxy for management team members. My bias is to approach business school professors or lawyers, both of whom often have a wide enough network to introduce you to good board members.
The question comes down to this: How expensive will it be to assemble the team now, and what will that get you? How expensive will it be to go for funding without the team, and what will that get you? The answers depend on you, your idea and your network of contacts and advisors.
If you decide to start assembling it now, here are some networking sources to help you find team members:
Read "Do Your Research" for information on how you can do some back-of-the-envelope market research to help justify your marketing numbers.
As an entrepreneur, technologist, advisor and coach, Stever Robbins seeks out and identifies high-potential start-ups to help them develop the skills, attitudes and capabilities they need to succeed. He has been involved with start-up companies since 1978 and is currently an investor or advisor to several technology and Internet companies including ZEFER Corp., University Access Inc., RenalTech, Crimson Soutions and PrimeSource. He has been using the Internet since 1977, was a co-founder of FTP Software in 1986, and worked on the design team of Harvard Business School's "Foundations" program. Stever holds an MBA from Harvard Business School and a computer science degree from MIT. His Web site is a http://www.venturecoach.com.
The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.