The business plan must certainly be complete enough to contain very specific time lines as to what you, as the CEO or part of the management team will do and when. This is the action plan. Assuming that you are funded, the financiers will want to know very specifically what first steps the company will be taking.
Of course, there are some other obvious steps, such as organizing a corporation entity or LLC, but more importantly, they will want to see how the prospective company will be spending (investing) their money particularly in the cash flow statements and proceeding toward profitable operations. They would of course, already have reviewed your initial capital purchases, office expenditures, furniture etc., but they will be viewing with a critical eye how and when you intend to start selling and making deposits to the corporate bank account.
Criteria of a Business Plan
The action plan/time lines, like the entire plan must be reasonable, not overly optimistic or too conservative. They will certain expect that the entire start up team or you as the CEO, will be working long hours to achieve whatever sales or profitability goals were set forth in the business plan. If the time lines indicate that initial sales will flow in by the third month or fourth week or whatever, their question will be, “Is that a reasonable?” In every aspect of the business plan and especially in the time lines and schedule area, the investors will be critically evaluating it in terms of a basic “sanity test”: are these goals within the plan possible to achieve within the time frames stated?
Research Similar Products & Markets
One way to maintain credibility is to have performed enough research about the market, product area or technology that will support your time line and goals. This prevents the investor(s) from believing that the plan and schedules are far too aggressive and/or unrealistic.
This is also where your team’s background and experience will come into play. Obviously there are no set rules. If the opportunity is demonstrably good and if the products or services offered are well thought out and appear to be a breakthrough in the market, but they still have doubts, they’ll merely ask you to explain how you expect to meet the goals in your plan. You may have to reevaluate your time schedules, but in the end, it is in your prospective company’s best interests to be realistic in presenting your time lines.
How Time Lines Are Represented
Within the context of the plan it is best to graphically present time lines.
There are three main reasons:
- It is easy to understand (a picture is worth a thousand words).
- It reduces potential confusion on the part of the funding source
- Most actually expect to see a graph or drawing
A good tool for developing a graph for a time line is using Microsoft Excel. One of the benefits of using Excel is that it is easy to format and modify, if business conditions change. Also, if the plan is in computerized form, it can easily be sent out via e-mail as an attachment.
All in all, the time line is only what you will do, when and if you have the necessary funding. It cannot be simplified much more than that.
Nick Schklair - Nick Schklair, author, writer and business consultant has published a work on business startups in today's economy.
