Growthink Blog

What the Business Plan Expert Knows


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Growthink Co-founder David Lavinsky was interviewed on BusinessWeekTV recently regarding his core understandings of strategic business plan development gleaned from nine years of working with hundreds of entrepreneurs.

Entitled "What the Business Plan Expert Knows," key takeaways from the interview include:

  • Changes in the Nature and Expectations for Business Plans over the Years. Because of the nature of technology and the "flat world," investors today are less interested in first mover advantage as a key value driver and more interested in the track record/experiences of management and the initial execution/market traction of the business.

  • The Importance of Writing the Business Plan Right Away. The biggest cost in any business is the opportunity cost - or the cost of pursuing the wrong opportunity. The best way to minimize this cost is to undertake a formal business plan development process at the start of any new business or any new growth initiative for an existing business. This is especially true for the market research and feasibility study components of a business plan: the analysis of the industry, competitors, and customers that is the core of sizing and scoping the prospective market opportunity.

  • The Difference Between an Investor-Focused Business Plan and an Operational Plan. An investor-focused business plan is, at heart, a marketing document. It must contain all of the elements of an operationally-focused business plan, but needs be developed and presented in such a way as to have a clear call to action to invest. It must have a compelling, flowing narrative. An operations-focused plan, which Dave believes should be created on an annual basis (and reviewed consistently), should primarily be focused on key milestones - such as number of visitors to the Website, headcount, customer attrition rates, etc.

  • The Rise of the Niche Investor. More than ever, investors have grouped themselves into various niches - software as a service (SaaS), healthcare, renewable energy, franchising, etc. It is important to draft the business plan in congruence with these niche orientations.

 

The full interview can be seen on BusinessWeekTV here.


New Year's Resolutions For The Entrepreneur


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The tradition of making a New Year's Resolution dates back to ancient Babylonian culture, when the most popular resolution was to return borrowed farm equipment. Today, many are still using New Year's Resolutions as their way of setting business goals.

If you're an entrepreneur -- or even if you aren't -- here are eight New Year's Resolutions that could lead to success in 2008.

#1) Don't be afraid of new things.

In 2008, you will see a lot of new websites, new software, new companies, and old companies offering new products and services. Get rid of the mentality that some of these new offerings don't affect you. Rather, try as many new products and services as you can. Make predictions on which you think will work. Watch to see which ones DO work and refine your strategic thinking accordingly.

#2) Find someone you hate, or someone you love, and follow them.

Many people are motivated more by hate than by love. Find someone who is really successful that you don't like and use them as a benchmark. If that scoundrel can be successful, so can you. Follow that person, and when they succeed, force yourself to succeed as well. Or, if you prefer, follow the career of someone you admire, and each time they succeed at something, emulate them by working harder in order to succeed yourself.

#3) Develop a NEW To-Do list.

Look at your To-Do list, and you'll find that it probably has things on it from a year ago. Delete those things. Create a new list of only the things that MUST be done in order to be successful in 2008. Create a plan to achieve those things.

#4) Talk with your current and prospective customers.

Entrepreneurs often develop the mindset that their ideas are great and will work. They often don't like getting feedback from customers and prospective customers, because it might be negative and burst their bubble. Go out and talk with customers. Even if they HATE your idea, they may spark you to come up with another idea that they LOVE.

#5) Organize.

Organization sucks. But once you do it, you'll save time each and every day. Organize your email inbox and your filing cabinet so that you have easily accessible folders and can find everything quickly and easily. This will save you many, many hours in the coming year; hours that could be used to create new products/services and better fulfill on existing ones.

#6) Make sense of something that doesn't currently make sense.

For some people, words from a Shakespearean play seem like gibberish. For others, a world renowned painting looks like paint that a child could have splattered on a canvas. Find one thing that you have avoided for years, or something that you have discarded as unimportant, or that just doesn't make sense to you. Analyze it. And make it make sense to you. Even if you end up interpreting it in a different way than others, that's OK. What's important is that the process will train your brain to look at problems and situations differently, and give you an improved ability to overcome obstacles.

#7) Keep a blog, diary or other method of tracking your progress.

We've all heard the saying that you can't improve what you can't measure. Measure your progress in 2008. Our lives today are so incredibly busy, and every day, each of us is working on numerous projects. Track your progress on each important project. This will allow you to see what you've accomplished, come up with ways to ensure that your goals are completed on time, and help you to forego the non-critical tasks that eat up your time.

#8) Do it and do it on time.

How many ideas did you have in 2007 that you never found time to execute on? How many phone calls or emails did you want to make (or send), but you didn't find the time? I just did the math; there are 525,600 minutes in a year. That should be enough to accomplish the key things!


The Most Annoying Commercials of 2007


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Every now and then, a commercial comes along that really makes you stop and take notice. This year we saw a good amount of those, and entertaining ads from companies like Geico and Dove made us smile, laugh, and think about our culture at large. Then there were the commercials that annoyed us. Badly.

Some of the following ad spots were a good laugh the first 400 times we saw them, but then we began to pick them apart. Some of them just stunk from the beginning. Regardless of the reasons, here are the commercials we'll be glad to forget about in the new year.

 

 

12) Burger King - Whopper Freakout

If there is one thing old men, housewives, and emo kids can agree on, it's that the whopper freakin' rocks. This fact, however, didn't stop Burger King from having a little "fun" at the evangelists' expense.

Apparently, their game plan was:

 

  1. Cease sales of the flagship product
  2. Place hidden cameras to capture the reactions of the most loyal and frustrated customers
  3. Use the footage to set up a website and craft a national advertising campaign

 

If that doesn't say "we love our customers," what does?

 

 

Want to avoid these types of mistakes?  Speak with a professional business plan writer today.

11) Apple - iPod Nano

Leslie Feist was one of our favorite indie musicians in 2007. For those of you who've been out of the loop, indie songs are supposed to be approximately 50% cool and 50% catchy. That is the balance Apple was looking for when they enlisted "1, 2, 3, 4" to help hawk their new iPod line. Unfortunately, this tune ended up being too catchy, and then, painfully annoying. Now, Feist's microscopic-yet-highly-choreographed prance in tight Canadian spandex is the lone redeeming value to these commercials.

 

 

 

10) Volkswagen - Eos

This is when the otherwise-pleasant Wilco-scored Volkswagen ads jumped the shark. No dude, you are NOT the Stay Puft Marshmallow Man.

 

 

Are you starting a new business or seeking to grow an existing business?  Contact a Growthink business plan consultant for complimentary consultation.

9) Astelin - Doo Wop Allergens

"Don't let allergens or irritants do you in..." Gee, thanks docs! Oh wait, you're not doctors. You're a barbershop quartet that sings about allergy medication! Hmm, well you do have the Astelin logo unevenly dispersed across your sweaters, so you must know what you're talking about...

 

 

 

8) Coke - Grand Theft Auto Parody

How dare they emasculate Grand Theft Auto with this garbage?

 

 

 

7) Axe - Bom Chika Wah Wah

There were a handful of similar ads from Axe this year, but this one was especially heinous. This girl's mother must be so proud.

 

 

Growthink's business plan consultants can help you avoid these mistakes with a professional business and marketing plan. 

6) Target - Hello, Good Buy

Target's commercial featuring the Beatles song "Hello, Goodbye," which repositions the song as "Hello, Good Buy," is the worst thing to happen to John Lennon's music since Yoko Ono. On the other hand, McCartney probably had to make a move to prepare for those gargantuan alimony checks that'll be fueling Heather Mills' checking account: And honestly, who has time to write a song called, "Hello corporate ignorance Licensing Fees, Goodbye Artistic Integrity!"

 

 

 

5) I Know Who Killed Me (Movie)

Um, What? Not only do we not know what's happening in this commercial, we don't want to know what's happening in this movie. Fortunately, neither did the rest of America.

 

 

 

4) Snickers - Super Bowl Commercial

While the goal of a Super Bowl commercial is to grab the attention of the masses, this spot is just slightly less controversial than: "Don't Be Gay. Eat a Snickers."

The agency that put this commercial together did wonders for the Snickers brand, which will now and forever be associated with chest hair antics and mild homophobia. Good job, gang!

 

 

 

3) HP - The Hands of a Seinfeld

Jerry Seinfeld is an American Treasure. There is no amount of celebrity, however, that makes it ok for him to repeatedly drench us in a river of shameless self promotion. Ok, we get it: You're wife has a cookbook and you made an animated movie about bees. You're life is awesome.

All we're saying is, next time Seinfeld is on screen for more than a minute, it better be as part of a Seinfeld reunion show.

 

 

Growthink's professional business plan writers can help you avoid these types of mistakes. 

2) Redenbacher - Orville returns?

Really? A dead guy with an mp3 player... selling popcorn? That it seemed like a good idea to anyone, let alone a team of people is the surprise of the year. We got chills every time we saw this creepy, creepy ad. To say that it was in poor taste is a gross understatement.

 

 

 

1) Cingular - IDK, My BFF Jill?

Cingular's commercial was pretty funny for a week or two. If we hear one more person say "OMG", "INBD", or "IDK my BFF Jill," though, we just don't know what might happen.

 

 

 

As 2007 draws to a close, we can only hope to say farewell to the Astelins, Whopper withdrawal, and overhyped bodysprays. Who knows what the New Year will hold for us in commercial land? There will undoubtedly be branding faux-paus, moments of poor taste, and scantily-clad attempts to seperate us from our hard earned dollars. Just remember advertisers: we'll be watching.

 


10 Famous Product Failures And the Advertisements That Did Not Sell Them


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Everyone makes mistakes. When big business makes mistakes, however, it’s typically after they’ve spent millions of dollars on marketing campaigns to let us know about their flawed products.

Here we present the advertisements for ten of the most infamous product failures in history.

 


The Greatest Time to Be an Entrepreneur


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Amidst the daily deluge of negative news regarding current business and economic conditions, it is important to look at the big picture: namely the very bright, long-term outlook for business and entrepreneurship in our global, Internet age. A recent interview with Ted Leonsis – the current Chairman of Revolution Money - a new Web 2.0 payment platform and credit-card service and Vice Chairman Emeritus of AOL (and one of the key executives that fueled AOL's Internet rise in the 1990's), drives this point home.

"It's the greatest time to be an entrepreneur," was Ted's core theme at a recent Wharton Entrepreneurship Conference. Leonsis also made a number of prescient points regarding our current "three-screen world" – a world in which entertainment and commerce play out on computer screens, TVs, and mobile phones:

  • In this new world, consumer expectations are "off the charts." They want everything "great, fast, and free."

  • Today's consumers are a study in contradictions. They have a lot of purchasing power, but little leisure time. They are real estate rich (though increasingly less so), with less cash. Family life is more fractured, and people are overscheduled and on the move. They are watching less TV and living life online more and more. Only 25% of 30-year olds now read newspapers daily. Circulations are in long-term decline at the New York Times, USA Today, the Washington Post and the Wall Street Journal.

  • In contrast, consumers now see the Internet as a "routine and indispensable part of their work and home life, spending 23% of their time hooked up to the Web, compared to seven minutes a day" in 1993.

  • North America now accounts for just 16% of worldwide Internet users, down from 35% in 2000. "If you're building products and services just for the U.S. market, you're giving up 80% of the market," Leonsis says.

  • Leonsis drives home the point that entrepreneurial opportunity has never been greater than it is right now, but by no means is it easy. "While it's never been easier to launch a new world-class business," investor and marketplace expectations are intense. "If you can't grow 25% month over month, we don't think you know what you're doing." If a startup doesn't take off fast, "you fall behind very, very quickly."

 

Just as significant, Leonsis says, is the "happiness business," which involves "getting out of the I, I and I, and really seeing where you want to fit into the bigger world."

At Growthink, we echo Ted Leonis' sentiments that business and entrepreneurship are and can be the best drivers of positive transformation in the world, and that Internet technologies and the global economy are and will accelerate this transformation to dizzying speed.

For more on Ted Leonsis, click here and here.


Federal Government Financing Alternatives


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Entrepreneurs and small companies often overlook two ripe sources for capital: federal grants and loan financing.

But instead of trading equity positions in their companies for thenecessary capital, entrepreneurs and small companies who pursue fundingfrom the Small Business Administration (SBA) and from Small BusinessInvestment Companies (SBICs) donít have to deal with an equitycomponent to their transactions. However, similar to individual ìangelîinvestor and VC financing, companies seeking SBA and SBIC financingneed a strong management team and value proposition, and a credible andexciting business plan to consummate a financing transaction.

That's because an SBA loan, regardless of whether it is a directloan from the SBA, or, more commonly, a bank loan guaranteed by theSBA, is essentially a bank loan. The benefits of it versus atraditional bank loan are that it offers a lower borrowing rate and asomewhat greater ease of attainment for startups and smaller businesses.

In most cases, the SBA will guarantee that 90 percent of the loanwill be repaid to the bank. As such, banks are taking on less risk andcorrespondingly are more flexible with approvals. The SBA does usuallyrequire that the founders of the company personally guarantee the loans.

Alternatively, Small Business Investment Companies (SBICs) areprivately organized corporations that are licensed and regulated by theSBA. Small or emerging businesses which qualify for assistance from theSBIC program can receive equity capital and/or long-term loans fromthese companies. Essentially, these companies provide their owncapital, which is then supplemented by federal funds, to the companiesthey fund.

In a testament to the great "multiplier" value of small businessinvestment, U.S. taxpayers benefit from the SBIC program as taxrevenues generated from successful SBIC investments have more thancovered the cost of the program. Equally impressive, over the last 20years, small businesses have created roughly three out of four net newprivate non-farm U.S. jobs, with a significant percentage of thesebusinesses initially seeded/funded by these government loan programs.


Market Research and The Business Idea


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It's an easy trap to think of market research as a data point collections process when in actuality, it's a creative undertaking where synthesis, strategies, and ideas are paramount.

Market Research - Tips & Ideas


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The tremendous clutter of 21st Century communication creates unique challenges in being heard above the noise when attempting to gather market research data. This is especially true when attempting to gather data via telephone surveying and/or email surveying on a stand-alone basis. For traditional telephone surveying, advanced voicemail and caller ID technologies have significantly reduced the percentage of connected market survey calls.


Nine Business Plan Pitfalls


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In our experience of assisting with their business plans more than 1000 startups, small businesses, middle market and Fortune 500 companies, we have noted the following common business plan pitfalls:

Pitfall #9: Not Including Successful Companies in the Competitive Discussion.


Analysis Paralysis


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Does anyone do "early-stage investing" anymore? When we present deals to "early-stage" investors, we find their criteria to be more in line with the milestones of more established companies, and it sometimes seems like early stage is a non-entity.

I was encouraged by the news of Battelle Ventures and Allied Minds Inc., posted in The Deal here. The author mentions how both firms operate under unique structures which allow them to do true early stage investing in "pre-seed" technologies sourced straight out of research institutions and universities. Battelle only has one LP, the Battelle Memorial Institute, while Allied Minds raises money from shareholders in exchange for future equity with no specified time horizon. Perhaps these "special" circumstances allow them to take on more "risky" investments without having to answer to large numbers of LP's.

It makes me wonder if the traditional VC model actually works. What if traditional VC's could take the handcuffs off and get dirty with raw technologies and mad-scientists out of some futuristic research lab? What sort of companies would we start to see hit the marketplace and how frequent? What about timing issues and market relevancy?

"The greater the level of involvement and business expertise focused on early stage innovation, the more and higher quality of innovation we will see coming out in the marketplace" - Lesa Mitchell- VP for advancing innovation, Kauffman Foundation.

Amen.


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