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5.0 Team & Payday

HOW TO PRESENT A BUSINESS PLAN >> Each section contains key Action Items located within the downloadable Action Guide >> Click to Download Action Guide.

So far in your presentation you have identified an unsolved problem in the marketplace and shown how your company can solve it; you’ve discussed how you’ll distribute your product or service; and you’ve described how your business will make money.  In this, our fifth segment of the Business Plan Presentation Action Guide, we’ll discuss the fourth and final part of your business plan presentation.

This part of the plan can be divided into four parts:

  • Part 1: you and your management team, the people who will create a “payday” for everyone involved
  • Part 2: how much money you’re requesting from your audience and how you plan to utilize it to produce the “payday”
  • Part 3: what milestones you expect to achieve with the money you’re requesting
  • And, finally, Part 4: what the “exit” event will be that will create a “payday” for the investors.

Let’s now discuss each of the four parts of the “payday” segment of your overall presentation.

The first part, your management team, is for many potential investors the single most important part of the entire investor presentation.  These investors care about this much more than what your product or service can do, about the market need it addresses, even more than about how your business will make money.  With so much at stake in this section, how do you convey that you have the right management team?

The first step I would take is to create what is often called a “Greenfield” organization chart.  This is an organization chart with no names on it, only the positions required to create a successful organization.  Go ahead and create a “greenfield” management organization chart for your company.  All you need are your key management and advisory positions.

ACTION ITEMS: Complete the Action Items in your Action Guide.

Create a spreadsheet, using Excel or a comparable program, to make your “Greenfield” management organization chart for your company. Simply list all the positions required to make your organization successful. Name the first column “Position” and the second column “Description”. Now proceed to enter the title of each position down the “Position” column, followed by adding a very short description of duties to the “Description” column.

Now create a third column in your “Greenfield” chart labeled “Name” and a fourth column labeled “Experience”. Proceed to enter the name of each person that corresponds to the position he or she holds or will hold. Next, add a few keywords to the “Experience” column that validate why each person holds their position. For example, enter “CPA – 20yrs” as an experience keyword if the company’s accountant has 20 years of experience as a CPA.

Presumably, you’re the CEO so put your name in that box.  If you’ve got a name for each key box, great!  If you don’t, don’t worry about it because you may not be at a point where you either need, or more likely, can afford, to fill every box. 

This organization chart will be the first PowerPoint slide in part four of your presentation.

When you present your management and advisory team organization chart, you’ll want to focus on why each person you have on the chart is the right person to help you move the organization forward.  You’ll want to provide a brief background on the team, emphasizing key experiences that are relevant to helping make the new company successful.

As I mentioned before, it’s okay to have empty boxes on the chart you show your audience.  What your audience is looking for is to see that you recognize “holes” in your team and that you have a plan for filling the holes.  When you discuss the organization chart, you’ll want to describe your plan for filling each hole.

Beyond conveying to your audience that your management and advisory team has the relevant experience, and that you’ve identified and covered the necessary bases, there are two other things I think you’ll want to try to convey. 

First, you’ll want to convey to your potential investors that you are willing to accept advice from outside experts in building the business.  Second, you’ll want, somehow, to convey that you and your team are adaptable to changing circumstances.

Why are these things important?  For one thing, potential investors hate “know it all” entrepreneurs.  Such entrepreneurs tend to be difficult to deal with.  If your potential investor senses that you are a “know it all” or that you’re unwilling to accept advice, you’re much less likely to get funding.  For another, the business plan always changes as it’s executed.  Successful entrepreneurs are the ones who have the capacity to adapt to changing circumstances.  Potential investors know this and, therefore, are looking to invest with people who are adept at identifying these changes and can adapt the plan accordingly.  How can you convey this?  Well, one-way is to think about past experiences you’ve had: how you’ve effectively used advisors in the past; how you’ve adapted to changing circumstances.  Go ahead and think about this and prepare your potential answers.

ACTION ITEMS: Complete the Action Items in your Action Guide.

List three examples of how you’ll convince investors that you have the right team.

1)

2)

3)

Let’s now proceed to the second part of your “payday” segment.  You’ll want to have a slide that shows how much money you’re requesting and how you plan to use the money. This should relate back to your previous segment where you outlined how much money you said you would burn through on the way to cash flow breakeven.  Go ahead and prepare a basic PowerPoint slide with how much money you’re requesting and how you plan to utilize that money.  At the same time, you should indicate what the pre-money valuation of the company is prior to this investment round.

ACTION ITEMS: Complete the Action Items in your Action Guide.

Create a PowerPoint slide that shows how much money you are requesting and explains how you plan to utilize that money. Include the pre-money valuation of the company prior to this investment round.

Having described how much money you’ll need in the investment round, you then need to address the third part of the “payday” segment: the milestones you’ll achieve as part of this funding round.  Potential investors want to know what you’re promising to achieve as a result of your investment round.  You should be prepared to list your projected deliverables and the date by which you’ll achieve them.  As an example, you might project some of the following:

  • Within 4 months of investment, the company will generate its first revenue
  • Within 8 months of investment, the company will enter a second market
  • Within 12 months of investment, the company will achieve cash flow breakeven.

Go ahead and write out what your milestones will be for this investment round.  If you want, you might combine this information on the PowerPoint slide that shows how much money you’re requesting.

ACTION ITEMS: Complete the Action Items in your Action Guide.

Create a simple timeline of the milestones you intend to accomplish for this investment round. Use the example provided in your lesson to begin writing a timeline.

The fourth and final part of the “payday” segment is, literally, “payday!” You’ll want to describe the way you project your investors will be able to “exit” the business, recover their investment and, by the way, make a lot of money on the investment.  Usually, “payday” for the investor takes one of the following forms:

  • The company is sold to a strategic buyer, for example, a competitor
  • A venture capitalist invests in the company and permits some early stage investors to cash out
  • The company goes public on the stock market.

Typically, the first scenario, selling to a strategic buyer, is the most likely.  Prior to making your presentation, you’ll want to make sure you understand the investment expectations of your audience, and you’ll want this part of your presentation to be in line with those expectations.  What you don’t want is a scenario like this: you project that your company will be able to “exit” in 10 years with investors making 4 times their money, but your potential investors want an “exit” in no more than 5 years, or no more than 5 years with a projected return of at least 6 times the investment.  If you get to this point in your presentation with such a “disconnect”, even if you have a fantastic idea, your audience will “tune out”.  The obvious solution to this problem is to ask your audience before you give your presentation what their expectations are.  It sounds obvious, but many entrepreneurs forget to do this and, as a result, try to “pitch” the wrong prospect.  How do you figure this out?  It’s simple.  Ask the prospective investor what their target investment criteria are and their expected returns. Once you know these, only try to “pitch” investors with expectations that are realistic for your company.

With this mind, go ahead and prepare a PowerPoint slide that outlines your planned “exit”.  This should include the “exit” time horizon, the type of “exit” that might be realistic, and your projected return.

ACTION ITEMS: Complete the Action Items in your Action Guide.

Create a PowerPoint slide that includes details about your “exit”. This must include a time horizon, what your intended “exit” will be, and the projected return that your investors should gain upon the “exit”. Remember that your “exit” plan MUST meet the expectations of your audience. So, contact a representative of the investment group or an individual investor and find out the preferred length of time and size of return that is expected on an investment.

You’ve now prepared the basic PowerPoint slides for the “payday” portion of your presentation.  Go ahead and prepare one final “thank you/for further information” slide.  This will include things such as your name, contact information, and your company’s web site.

ACTION ITEMS: Complete the Action Items in your Action Guide.

Create a “Thank you/for further information” PowerPoint slide that includes: your name, contact information, and your company’s website.

As we’ve done with the previous sections, let’s talk about things that presenters typically do poorly in this part of the presentation.  First, they oftentimes forgot to include information on one or more of the four parts I described.  They usually do include something about the management team, but oftentimes they fail to mention how much money they are requesting; they fail to include a pre-money valuation; they fail to include information about the milestones they expect to achieve, and they often fail to provide anything about the “exit” plan. What this usually means is that the audience will then have to ask them questions about these items.  This isn’t the end of the world, but I think it’s better to include all of the “basic” information in the presentation itself, not to wait to be asked by the audience after the presentation is over.

The second major mistake is to spend too little time on the subject matter of part four – the “payday”. I see this happen on a regular basis.  The reason, I believe, this occurs is because the presenter has spent too much time on other parts of the presentation, managed his or her time poorly, and hasn’t had enough time to discuss these topics.  This typically occurs because the presenter spends way too much time either demonstrating the product or talking about the marketplace, usually the former.  In my mind, it’s extremely important for the entrepreneur to convey to the audience that he or she has a good command of the four “payday” topics.  This is because at the end of the day, this is what really matters:

  • The potential investor needs to have confidence that there is either the right management team in place, or the entrepreneur knows what he or she must do to get the team in place
  • The potential investor needs to be confident that the entrepreneur has a good grasp on how much money is needed.
  • Sometimes, the entrepreneur asks for too little money and sometimes for too much money.  Neither situation is good.  Part of the case the entrepreneur needs to build before the audience is that he or she understands how much money is needed and is asking for a little more, to provide for contingencies.
  • The potential investor also needs to feel that the entrepreneur has established realistic milestones and has a plan to achieve them.
  • Finally, the potential investor needs to feel that the entrepreneur has an exit strategy that both has potential and is consistent with the investor’s goals.

There’s a lot of material to be conveyed here.  Since it’s towards the end of the presentation, the entrepreneur must have good time management skills to avoid shortchanging this section.  The other, more intangible, thing is that the entrepreneur needs to convey an impression to the potential investor that the entrepreneur has both thought about these matters and appears to have a good grasp of them.   As such, time management and tone are extremely important. At the end of this section, the end of the presentation the entrepreneur wants the potential investor to feel that he or she has a good grasp on this.

With that in mind, go ahead and prepare your PowerPoint slides and the text associated with the final part of your presentation.

ACTION ITEMS: Complete the Action Items in your Action Guide.

Now ORGANIZE and ADD any slides that you missed or want to add to PART 4 of your presentation. Only worry about content for now.

Next, either prepare a detailed outline of what you’ll want to say for PART 4 or, better yet, write out your text right now.

We’ve now completed all four parts of the basic presentation.  What you’ll want to do now is to go back and put all four parts together.  I suggest doing the following:

  • Count up the total number of slides you have (other than the introductory slide that has the company’s name and logo on it and the final slide that says “thank you” and provides follow up contact information.
  • Make sure that your slides cover all of the topics we discussed over the four parts of the presentation
  • More likely than not, you’ll have more than Guy Kawasaki’s preferred 10 slides.   If the number is 11 or 12 slides, you’re probably okay.  If it’s 13 or more, it’s probably time to do some editing.  If 13 or more, work on reducing your slide count to 12 or fewer (excluding, as I said, the welcome and thank you slides).

ACTION ITEMS: Complete the Action Items in your Action Guide.

COMPILE and REVIEW your slides. Make necessary adjustments and edits to ensure your presentation covers all of the topics discussed over the four parts and you do not have more than 12 slides. DO NOT include the “title” slide (if you have one at this time) or the “thank you” slide in your slide count.

Now that you’ve got your slide count down to no more than 12, preferably 10 or 11, take the four parts of your written presentation and put them together.  Read the entire presentation, as if you were giving it.  Time yourself.  If your total presentation is more than 17 minutes, it’s too long and needs to be edited.  Now you’ll recall I said the presentation should be no more than 20 minutes, so where did the 17 minute number come from.  The missing three minutes will probably be used up by working the PowerPoint slides.  As you give your presentation, you’ll end up taking time switching slides and explaining the slides.  If you have just 10 slides, you’ll have 18 seconds, on average, per slide for these activities.  Eighteen seconds goes by very, very quickly.  So go ahead and put everything together.  Once you’ve done this, you’ll be ready to move on to segment six where we take the presentation you’ve put together and condense it further into your elevator speech.

ACTION ITEMS: Complete the Action Items in your Action Guide.

Now, practice speaking your presentation. PRACTICE, PRACTICE, PRACTICE!

Next — 6.0 Elevator Speech »

Now create a third column in your “Greenfield” chart labeled “Name” and a fourth column labeled “Experience”. Proceed to enter the name of each person that corresponds to the position he or she holds or will hold. Next, add a few keywords to the “Experience” column that validate why each person holds their position. For example, enter “CPA – 20yrs” as an experience keyword if the company’s accountant has 20 years of experience as a CPA.