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Answering "Why You, Why Now" - A Critical Component of a Winning Business Plan
By Dave Lavinsky
Business plans continue to be an essential element of the capital-raising process. They must convince investors to take notice - investors that are shrewder today due to the ups-and-downs they have experienced over the past few years.
Adding to the financing challenge is the plethora of high-quality companies, both public and private, in which investors can choose to invest. In this environment, more and more investors are asking companies seeking capital the question "Why You, Why Now"?
The question seems simple at first, but has many complexities. The management team must clearly delineate what it is about the business opportunity that makes it such a good investment now. Should this investment have been made a year ago to cement a market leadership position? Or, is the venture before its time - will slow market adoption cause slow sales over the next few years, and as such, should the investment wait. Questions like these, based on investment failures from the past few years, continue to surface and must be addressed by the management team in their business plans.
Likewise the team must address what it is that makes them uniquely qualified to succeed. Does the team have proprietary (and protectable) technology, management talent and experience that competitors do not, long-term strategic partners? According to Growthink president, Dave Lavinsky, "Management teams must prove to investors why they are unique and why they will succeed. They can't just state how wonderful they are - they need to prove it through detailing past successes and unique qualifications."
A business plan that fails to address the "Why You, Why Now" question, is most likely a business plan that will remain in the stack of "not now" business plans. Business plans must present a compelling argument as to why the investor should invest and in our fast-paced world with unbelievable opportunities and opportunity costs, why investors should invest now. About the Author GT Business Plans has developed over 200 business plans for clients that have collectively raised over $750 million in financing, launched numerous new product and service lines and gained competitive advantage and market share. GT Business Plans is the sister site of GT Venture Capital.
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Some other articles by Dave Lavinsky | Should Entrepreneurs Hire Entrepreneurs? In his book, Gerber discusses that an entrepreneur encompasses three roles, which are: the technician, the manager, and the visionary. ...
Pre-Money vs. Post-Money Valuation When a company decides that it must raise capital, a key question that must be answered is how much the company is worth. For example, if the business needs ...
Finding a Venture Capital Firm Many ventures are faced with the challenging task of raising venture capital. The first part of this process is finding the right ...
Describing Intellectual Property in Your Business Plan Most companies that are worthy of raising venture capital have proprietary Intellectual Property (IP). In fact, the quality of the IP and the management team are often the two most important aspects of ...
The Marketing Plan and the Four P's The Marketing Plan section of the business plan demonstrates how a company will penetrate the market with its products and services. The Marketing Plan should include "the four P's" – Product, Promotions, Price, and ...
Developing Realistic Financial Assumptions in Your Business Plan Many investors skip straight to the financial section of the business plan. It is critical that the assumptions and projections in this ...
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