You can purchase the book at AMAZON.com
You can purchase the book at AMAZON.com
How long does it take an experienced investor to tell if a business plan will succeed?Well, if you ask Malcom Gladwell, he will say that the experienced investor can tell within seconds.Gladwell, the famed author of the bestseller The Tipping Point, starts his second bestseller, Blink, by talking about this phenomenon.Specifically, Gladwell tells the story of an interesting series of events... In 1983, the J. Paul Getty Museum was presented with a sixth century BC statue with an asking price of $10 million. The statue was consistent with other statues of its kind -- Testing confirmed it was made of materials that were thousands of years old. And papers proved that the statue had been in the private collection of Swiss physician since the 1930s.So, the museum decided to purchase it.Fortunately, before the deal was consummated, the museum had a few more experts assess the statue. Each knew right away that it was a fake. What's most interesting is that these experts didn't have to conduct fancy tests; they simply looked at it and knew.When asked, one expert replied that something just "didn't look right." Another said that the first word that came to his mind was "fresh" and that "fresh" was "not the right reaction to have to a two thousand year old statue."Upon further review, it was determined that the statue was in fact a fake.How did the experts know that it was a fake in just a few seconds and without detailed tests? Gladwell believes the experts were able to make quick, subconscious conclusions based on the immediate facts presented to them, and that these conclusions are often correct.So, how do you think investors and loan officers do their jobs?Are they like the museum experts who knew by looking, or the museum technicians who ran all sorts of tests like carbon dating? Do you think the investors and loan officers immediately run detailed background checks on the management team, reassess the financial model using more pessimistic assumptions, or try to uncover competitors that the plan missed? NO.
These investors, like the museum experts, give simply a quick glance at every business plan they get. Only if their first few seconds lead to the subconscious conclusion that the plan could work, do they even consider investing more time in assessing it.As such, it is absolutely critical that your plan pass The 42 Second Test.
That is, if the investor only has 42 seconds to review your business plan, at the end of this time, will they put your plan in the discard pile? Or will it make it to the pile to review later, and in more detail?In order to go to the latter pile, your plan must connect with the investor. It must make them fully understand the core concept of your business and get them to believe in your potential.
That is the only thing that you have to accomplish right away. You will have the rest of the plan to tell your full story, and many meetings with the investor to explain every little detail if they are interested.
The first page of your business plan is your statue: If it's real, you must immediately prove to investors that it's authentic so that they take the time to really examine it.To your success!Dave LavinskyGrowthink Co-FounderGrowthink helps organizations at all stages of their development prosper through their suite of integrated professional consulting services.
article reprinted with permission from Growthink.com
Growthink helps organizations at all stages of their development prosper through their suite of integrated professional consulting services, including:
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In addition to helping these companies achieve their growth goals, Growthink’s work and expertise has been repeatedly recognized by leading media sources such as The Wall Street Journal, BusinessWeek and Entrepreneur Magazine.
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READ THE ENTIRE 1st CHAPTER HERE:
The genesis for writing the book came about in 2006. At the time, a good friend of mine offered me access to his million-dollar penthouse while he traveled overseas - a place where he generated his first million dollars. The place had always inspired me, and I felt it would be a great place to write my book-this book.
The book's content is based on both material that I wrote in 2006, but also from several years worth of journals that I kept documenting my entrepreneurial experiences.
There is a TON of stuff that I would love to add to the book - and it would end up being 1,000 pages, practically unreadable in today's times.
A New Breed of Entrepreneurs
Since writing the book, I've met and worked with a whole new generation of entrepreneurs - serial entrepreneurs mostly. These individuals have deepened my understanding of business. I've also spent some time working within a small boutique M&A firm dealing with clients ranging from $50M to $1B in revenues. It's shocking how similar the problems are with firms at this level and at the small business level. They have the same worries about staying in business, growing their business and investing their resources widely - they just have more zeros to work with, but the pressures the same...
Avoiding (or Escaping from) the Founder's Trap
Another area I would expand on in the book would be the discussion concerning what I call "The Founder's Trap." Where, founding CEOs just stay too long in their business. I continue to run into a lot of small businesses, really "lifestyle businesses" where the CEO is just not that interested in the ho-hum day-to-day happenings of their business. These individuals are B-O-R-E-D, looking for something to fix, to take and run with it. Anything to distract themselves from the mundane maintenance of their business. Today, there are lots of choices; they want to start blogs, create a "social portal," they want their employees to "step-up" and be "accountable" i.e. act like owners without being compensated like one. They want to implement the latest fad and cheaply please. Finally, they want to experience the rush of the good old days, where they were living on the edge financially between success and failure--they want the rush without the danger. They want to coach their people to "do as they say and not as they do." And finally, they want an answer. You know what the question is, don't you? They want an answer to the question: "Is this it?"
South African investment banker Euvin Naidoo explains why investing in Africa can make great business sense.