Tell the Investor Why this Management Team and this Company are the Right Stuff
Posted by Steve in Leadership, Pitch on July 2nd, 2009
In this series of installments I am discussing the executive summary and how to make it stand out. The executive summary should present the compelling reason for the investor to buy into the company.
Investors invest in people. More than one company can come up with the same idea, but the difference between them is the way they execute it and handle the ups and downs along the way.
The executive summary needs to show proof that these people are the right people. I look at six key points and then come up with a concise story covering what the investors need to know:
- Which top management and key members will be integral to the company’s performance?
- What experiences or types of products have they done, that the experience will be integral to the company’s performance?
- How long has the company or team been working on this project together?
- What major accomplishments (milestones) has the company hit in achieving their goals?
- What is the current state of the product/service line?
- What validation exists that this team can sell the product/service line?
When looking at this list it starts off with the information about the company, and the accomplishments. It ends with questions about the product line and the future of the company. With this information, you build your case that this team not only has achieved success so far, but can continue to do so with the advantages they have. Item 6 also includes outside forces that further validate that this team has formed in the right place at the right time to make this successful. Items 5 and 6 can also be used later in discussing other elements (like what is the money going to used for and how will it be marketed) but the focus in this section is how this management team as opposed to another management team will take advantage of the situation.
This may be the most important section as the investor will want to keenly observe how this management operates and then determine whether or not they will be successful.
A win may not just be about money… other types of wins
Taking a break from talking about the executive summary…
I want to take a moment to think about this. Yesterday, I wrote that “it is about the win”, and I was relating it to how much money you are making.
Have you ever thought about other forms of wins, other than just making a lot of money? Are you saving something in the environment? Are you helping out your fellow inhabitant of Planet Earth?
There is nothing wrong with focusing your big win on something other than money. In many cases, this will actually help you get the attention of the investors. However, and unfortunately, investors have to answer to someone (if not just to themselves and their families), so they need to make money.
If your big win is saving a rare fish and you want investors; then figure out how you can make a big win for both: the fish and the investor.
Most likely, someone else will, and they will get the investment instead of you.
Give the Investor PROOF that the Market needs your solution
In this series of installments I am discussing the executive summary and how to make it stand out. The executive summary should present the compelling reason for the investor to buy into the company.
Yesterday, I asked if after reading someone’s executive summary you ever wondered what they were doing. Today, I ask if, once you figured that out, you then asked, why? What is the compelling reason that this project is going to make money?
That is the second biggest thing that investors want to know. First, what are you doing? Second, why is that important to me? Why will that make a lot of money?
Therefore, the second part should address: What is the market proof that the company is doing the right thing? There are four points I address here:
- How big is the market?
- What does the market pay for this product/service? Will it change and why?
- Who are the biggest players in this market and how big are they?
- What indicators show the market is growing and that the company will make money?
Think about this: if it’s a small market, the market is shrinking, and there are already huge players in the market, then it may not be a good market to get into and make a home run. However, say it’s a huge market, the market is growing, and some big players are already exploring it, then its possible. Do not think that big players means you are excluded. Big players often move slowly, or have to invest in massive projects that take a lot of time to finish.
Do not waste the investors time. You just told them what you are doing, and now you are telling them why this is going to make a lot of money.
Remember, it is about the win.
Start the Executive Summary with the Goal
In the next series of installments I am discussing the executive summary and how to make it stand out. The executive summary should present the compelling reason for the investor to buy into the company.
Have you ever read someone’s executive summary, ask yourself one question: What are they trying to do? If it is not clearly stated then they missed the boat.
Clearly, they should introduce themselves and what they do; but then just right out state the goal. Three questions should be answered:
- What is the name of the company and its form?
- What is the company going to do? This could be the goal or mission.
- What will this lead to, or what else will the company do that will ultimately deliver the big payback?
Example:
ABC, Inc. will build and operate an ethanol production facility (100 Million gals/year) in Texas, primarily for the fuel additive market. Other products will include 5 million tons of grain products for livestock feed and 50 Billion cubic feet of CO2 for carbonated beverages.
All the investor has to do to know if this fits into their area of interest is to read the first two lines. Secondly, if it is in their area of interest they would probably already know that this is a very large facility and would deliver a large return if built and operated successfully. If they are not in this arena then they can quickly say, “No, “ but more importantly, direct it to someone that might say, “Yes.”
Keep it simple and to the point. That will be the common theme in every one of these discussions on the Executive summary.
Executive Summary of the Executive Summary
Posted by Steve in Miscellaneous, Pitch on June 23rd, 2009
Every investor wants an executive summary. It is the entire business plan in miniature form: 1 or 2 pages. Typically, it is written after the business plan but since it is either the first thing or only thing read by potential investors, it needs to be the best written.
There are different ideas on how to write an executive summary. Some say it should be the plan in miniature with the same outline. Others say it should outline the problem, background information, proposed solution, alternatives, and any conclusions. I suggest that the executive summary be a highly selective form of the business plan with sections answering the following key questions:
Bottom line, what is the goal?
What is the market proof the company should do this?
What is the management and existing company and what are the key accomplishments to date that state they should get investment? Why them?
What is the first item the company will produce with the money, and therefore, why do they need the money (how is the money going to be used)?
What are the high level elements of the marketing plan and are there any key activities happening now?
Why will this project be successful?
What is the major risk issue and how is it being addressed?
Why is the company talking to outside people and what do they want from the investor? What is their exit plan and how will they repay the investor/bank, etc?
These are the key points that the primary audience (investors, loan officers, etc) need to know if they want to read further or throw it back in the pile. This information will get the attention of the reader, and give them an incentive to read more or talk to you. More on each question later…
Importance of Bu Yao
Posted by Steve in Miscellaneous on June 22nd, 2009
I just returned from a two week trip in China. I want to dispel two myths.
Myth 1: There is no capitalism in China. FALSE
There is plenty of capitalism in China. From the person in the subway retail outlet selling purses and watches to the major manufacturing businesses like SMIC (Semicondutor Manufacturing International [Shanghai] Corp.) the China people are embracing their form of capitalism. I did not get enough exposure to really understand all aspects but from what I saw on the street the people are trying very hard.
Myth 2: Shopping in China is a pleasurable experience. FALSE
At the same time that they are capturing capitalism, I found shopping in China to be distasteful. Was it the fact that they kept dragging me to souvenier shops? No, I went to all levels of stores in Beijing, Chongqing, Fengdu, and Shanghai.
Was it the fact that you could not trust the quality of the products because there are so many knockoffs? Yes.
Was it the fact that they followed you and pestered you at almost every store, not really giving you time to look at something? Yes. I think the only time I bought anything was when they let me take a look at it on my own terms.
A key lesson learned here: Just because you own a store, and think you know capitalism does not mean you know how to make sales or will be very successful. I saw plenty of empty stores there. Obviously they would not be there unless they made money; but then again, I do not know the turnover of some of these stores. I doubt these shopkeepers were making a bundle of money. In a lot of cases (especially at Fengdu) the desperation of them to make a sale (any sale) was readily apparent. I watched as my fellow tourists were inundated with crazy sellers trying to make a quick buck. Some of the tourists loved it and bragged later how they got this or that piece of junk for almost nothing.
I decided to focus on the sights.
So, what is “Bu Yao”. Its a key phrase you need to learn if you go to China. Pronounced “Boo Yow”. It means, “I don’t want.” I think it technically means that “it is not important.” Say it and they leave you alone. I said it a lot there and they immediately left me alone.
For the most part, you never need to say that here. I’m glad but the key point still stands: Just because you have a business does not mean you know what you are doing and will be getting rich. Listen to your customers. Take the time to observe what they want. Deliver it to them.
On Hiatus
Posted by Steve in Miscellaneous on June 1st, 2009
I am going to take time off of this blog to collect more material and start a series later this month. New material will appear starting June 18.
Two Prerequisites to Creating your Marketing Website
Posted by Steve in For Job Seekers, Miscellaneous, Plan, Strategy on May 27th, 2009
Yesterday, I wrote about Kenrick Chatman and his web site: www.kenrickchatman.com and that it is a great way to market yourself.There are two pre-requisites to market like this. First, figure out a subject area you really like. Second, write out a long outline of subjects or speaking/writing topics that can be further expanded. To keep up an interesting site, you need to provide material. If you cannot do this with your subject area, then either choose a broader subject or find another subject.
Provide variety, but stay on topic. Keep people interested in you.
Market yourself…
Posted by Steve in For Job Seekers, Miscellaneous on May 26th, 2009
Everyone is the CEO of … themselves. Regardless of whether you have a job, are looking for a job or manage your own company, you are always in charge of yourself. Therefore, as the head of your own marketing, you should manage a marketing campaign to the masses on bringing them your key product: YOU.One great example is Kenrick Chatman. He is currently looking for a position in strategic consulting and his web site is at www.kenrickchatman.com. The focus is on sales strategy. He identified the one key thing every company needs in these troubled times, more sales, and he is delivering that advice. If you want execution, then you need to hire Kenrick. Kenrick is also doing a blog which you can follow on his site.
I like his site because it is professional and provides information for a variety of business types. He can use this as a way of marketing himself to a variety of people without constantly saying: I am looking for a job; but implying that he is a person that gets results. He found an area that interests him and as he continues to update the site and do research it can provide a source of constant training.
Big guys do not waste time
I have clients of all sizes, from guys pulling in barely enough to make their bills to those bringing in millions. The small guys are constantly calling with problems while the big guys rarely call. There are a few different reasons, but the biggest difference between the biggest and smallest guys is that the biggest know when to spend their time on the minutia and when to just walk away.
The big guys understand that time is money and that spending hours on saving $1 could be better spent on brining in $1000. Small guys are right in thinking that focusing on details will help them get ahead, but the problem usually stems from the fact that they do not how to take their focus and make it productive. The big guys know how to do this.
The bottom line is that the big guys do not waste time. They focus on solutions or work arounds and move on. They avoid situations that create more problems, and they avoid situations that will bog them down in more minutia. The focus is on the revenue drivers: what activities actually bring in the money. Any activities that are wasting money or not bringing it in either need to be optimized or dropped.
Think about your next activities: are they bringing in money? Are they driving the metrics that make you successful? If not, rethink your activities. Are they really necessary? Ultimately, you need to hit your goals and the focus needs to be on those activities driving towards those goals.