| > | | | | 1) significant, 2) quantifiable and 3) cost-justified? (y |
| Your ability to get investment funding makes the | | | | n). If you provide a benefit which is important, and |
| difference between a $100,000 a year business and | | | | you can prove it - there is a much higher probability |
| a $500 million a year business. Ask the right quesitons | | | | of generating sales. |
| and you just might have a shot at getting that much | | | | 10. Is there a demonstrated market for your |
| needed capital. | | | | product? (y/n) If you have an existing product, is |
| Whether you are seeking capital for your company | | | | your customer base expanding? Investors would |
| or are optimizing your business strategy, the most | | | | rather fund sales and production than product |
| important element - particularly for outside investors - | | | | development. |
| may be your written business plan. You can tune-up | | | | 11. Is there wide appeal for your product or service? |
| and supercharge your plan using this 19-step checklist. | | | | (y/n) Are there enough potential customers in the |
| When your written plan firmly answers yes to each | | | | target market that you can earn significant profits, |
| of these 19 questions, your market/product strategy | | | | for a long time? Are there follow-on products to |
| is in terrific shape plus you increase the odds of | | | | sustain revenue and profit growth? |
| attracting investment capital. | | | | 12. Does your company have the ability to sell your |
| If you don't already have a written business plan - | | | | product? (y/n) Particularly in companies where the |
| write one! Your business plan is a blueprint for your | | | | founders have technical backgrounds, a question to |
| whole company. It describes in detail your goals, the | | | | ask is "Who is going to sell your product or service?" |
| financial and technical viability of your goals, and the | | | | What about outside distributors? |
| strategy you will use (or are using) to reach those | | | | 13. Is there an experienced management team? (y/n) |
| goals. And your business plan is a working tool - it is a | | | | Investors would rather fund a solid team instead of |
| yardstick to measure your progress and a compass | | | | one lone genius with a great idea. The team should |
| to keep you on course. | | | | be highly qualified in marketing, sales, finance, and the |
| Must a business plan be written? | | | | product/service area itself. Of course, a |
| Yes! A plan which is not written usually has not been | | | | demonstrable track record helps. |
| thought through fully. And despite what you may | | | | 14. Can you demonstrate a likely return of 5-15 times |
| have read, it is doubtful that any business ever | | | | investors' capital, over a period ranging from three to |
| attracted capital on the back of a napkin. | | | | seven years? (y/n) The actual parameters used by |
| Use this checklist as a way to identify where your | | | | venture investors will vary based on which stage you |
| strategy, as spelled out in your business plan, needs | | | | are in (idea, startup, development, expansion, |
| work. Each of the questions below highlights an area | | | | turnaround). |
| considered critical to technology investors. | | | | 15. Is there a clear exit strategy for investors? (y/n) |
| 1. Can the key ideas behind your product or service | | | | The most common strategies for returning investors' |
| be stated in one or two sentences? (y/n) | | | | capital are 1) going public; 2) acquisition of your |
| 2. Does your company have at least one unique and | | | | company; 3) new investors; 4) founder's buyback or |
| compelling competitive advantage, which cannot | | | | management buyout. |
| quickly or easily be duplicated? (y/n) Examples are a | | | | 16. Have other investors already put money into the |
| special feature, a cost advantage, a technical | | | | company, particularly the senior management team? |
| refinement, a new delivery system or a special | | | | (y/n) This reduces the apparent risk, reduces overall |
| supplier. | | | | exposure, and shows that management "has its |
| 3. Is your competitive advantage proprietary? (y/n) | | | | money where its mouth is." |
| That is, can it be copyrighted, patented, trademarked | | | | 17. Have you clearly defined a structure for the |
| or otherwise protected? Can you keep it exclusive to | | | | investment you seeking? (y/n) The structure should |
| you? | | | | include: who is involved, how much capital is needed, |
| 4. Is your industry segment growing by 25% or | | | | what minimum investment you will accept, how much |
| more? (y/n) If not, can your new product dominate | | | | equity that will buy - and, of course, the projected |
| its segment? If the answer is no, you probably won't | | | | return on investment. |
| be able to generate the kind of financial returns | | | | 18. Are your financial projections realistic? (y/n) Have |
| investors look for. | | | | you soundly justified your projected growth rates |
| 5. Does your product or service create a new | | | | and other financial assumptions? |
| market? (y/n) Although generally positive, this could | | | | 19. Have you clearly examined the risks? (y/n) |
| be a trap - in a brand new market, the potential can | | | | Investors like to know that you have considered the |
| be slow to develop. Lotus Notes created a new | | | | risks. This is key - can you turn your risks into |
| category but took years to create value for | | | | opportunities? |
| investors. | | | | Too many no's? Remember, each "no" opens up an |
| 6. Is your market in "early momentum" - the market | | | | area for you to strengthen your business. Even if |
| growth phase where market revenues have recently | | | | you aren't seeking capital, each question highlights a |
| taken off? (y/n) Venture investors prefer markets in | | | | critical success factor - which, when mastered, will |
| this stage because the time-to-create-value is shorter | | | | increase your profits, your performance, and your |
| and the growth potential still large. | | | | future success. |
| 7. Is your target market segment 1) tightly defined | | | | In order to help you discover hidden value and |
| over a population sharing common characteristics, 2) | | | | opportunities in your existing business, and to make it |
| large enough to support significant profits, 3) served | | | | easier to spot potential problems while you are just |
| by communications channels to reach that market - | | | | starting out, I've created the Discover Hidden Value |
| i.e., trade or special interest publications, response | | | | Business Building Guide. A remarkable aid to |
| mailing lists? (y/n) | | | | accelerating the growth and profitability of your |
| 8. Is your company filling a gap in the market, or do | | | | business, this program of insight-provoking questions |
| you have a "gee-whiz" product which you think is so | | | | and checklists enables you to rapidly diagnose, |
| terrific that customers will surely want to buy it? (y | | | | troubleshoot and optimize every part of your |
| n) | | | | business, from marketing to sales, customer service |
| 9. The benefit of your product or service to users is | | | | to product development and finance to production. |