What makes a successful Entrepreneur: Luck or Great Technology and Good networks
An entrepreneur needs technology not luck successful and good networks. When pitching to venture capitalists it is important that you have a highly detailed business plan. The more detail about the product or service and how it has features that are more sophisticated than those currently in the market the better. Being charming is also essential.”
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It is true that luck, without the innovative idea, technology, and well-organized personal and professional network, does not ensure success for entrepreneurs in the long-run. They need a good planning before making their dream a reality. The importance of professionally documented business plan especially in fetching capital for the start-up cannot be denied. However, its importance is growing day by day due to strict credit from financial institutions and due diligence of venture capital firms and angel investors.
Technology and Networks:
In the present era rapid technological changes, many new start-ups thrive and grow on the basis of advanced technologies and social media campaigns. Thus the role of information technology cannot be overlooked while starting a new venture. Still, entrepreneurs need well-organized plan to decide about the type of the technology to be used and how it will help the venture to succeed in the long-run (Baron, and Shane, 2005).
We all have also heard the success of the billionaire, Bill Gates, who revolutionized the personal computer industry. His success most often attributed to the networks, his mother had developed by setting on the board of United Way with John Akers, a high-level IBM executive and, who used to share
things about the new breed of small companies in the computer industry. This plate form also provided an impetus to Bill Gates for DOS contract in IBM and the rest is the history: Microsoft eclipsed IBM as the most powerful computer company. However, the whole success of Bill Gates cannot be attributed to one single factor. The innovation and the plan he adopted also contributed to his start-up, Microsoft Inc. (Baron, and Shane, 2005).
Role of a business plan and Venture Capitalists:
Despite the importance of innovative technological solutions and well-developed personal and business networks, I would agree that success of a start-up in convincing and raising capital would greatly depend upon the quality of business plan an entrepreneur presents.
New ventures are those few areas of business, which have attracted much attention, and similarly, the business plan is the area of new venture creation, which has attracted as much attention. That is why countless books and articles have been written on this particular aspect. Moreover, recognizing the significance of business plans, a growing number of annual business-plan competitions are held by business schools, private and public organizations in many parts of the world.
A business plan, the foundation of a new start-up, also ensures the growth and development of the new venture, particularly in the later stages of growth. As represented in the following case of Bottleshop.com.au which at the startup with $50,000 went without the proper business plan and started selling alcohol over the internet. The founders remained successful in the beginning as the company ‘sales surpassed the projections in the first few months, but they started facing problems of shortage of money to support the expansion. Then the owners had to revert to proper business plan through which they were able to convince 10 investors and raised funds of $ 250, 000 to fund the company’s growth.
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Thus entrepreneurs should ask themselves right questions for speaking the language of investors and venture capitalist before setting out on the most daunting journey of businessperson’s career.
People and Qualification: the entrepreneurs should make sure that their business plans include all the key people including themselves as well as outside parties providing the key services such as lawyers, IT experts, and suppliers. It must also explain in detail the senior manager’s experience and qualifications.
The Potential Market and Consumer Trends: the investor ready plan should have the sound profile of the business itself-what it sells and to whom, how can the business grow and fast, what are the major hurdles in the way and what its economies are. The business plan must also explain how the product or service will be marketed, distributed and sold.
The Technology and Production: the business plan must describe the core technology and its competitive advantage and how mass-production would be possible for the selected products and services.
The Risk and Reward: There should be a strong assessment of the very thing that goes wrong and right. It must also identify the key risks and how they will be addressed. The founders in order to convince the potential investors must also explain in depth the milestones to be achieved, that is, item, timing, and associated cost.
One important consideration is that potential investors usually don’t have much time to read lengthy essay-type plans; hence all the above-mentioned points should be summaries in about two-page report.
In short, the significance of a great business plan in raising capital from venture capital firms for start-ups cannot be ignored. However, the results of one of the recent study show that planning documents like business plan play only a ceremonial role and do not inform venture capitalists.