five guaranteed ways not to get your business plan funded
TRANSCRIPT
David Karp, Sprout Lenders
Greater Boston Slow Money Business 101
October 10, 2012
The mission of Sprout Lenders is to support a vibrant and healthy local food system by making small loans to farmers, producers, and food system entrepreneurs that serve the greater Boston area.
Foodies, finance majors, sustainability geeks, etc. looking for decent ROI and better food
Next loan application deadline: November 15 ◦ www.sproutlenders.com◦ [email protected]◦ @sproutlenders
Left and right-brained marketer
Director of Marketing, Currensee
Treasurer, Photographic Resource Center at BU
Founding Member, Sprout Lenders
Business coach, Neighborhood Business Builders
MBA, MIT Sloan
Favorite sandwich: grilled cheese (extra sharp local cheddar)◦ [email protected]
◦ @limeduck
Here are five things NOT to do
Some investors read the financials first, and the rest not at all if they don’t add up
Cashflow is more important than your mother
Show a clear path to profitability and payback that supports your narrative
Risk is part of business and of life
Showing awareness of the risks of your business and explaining how you’ll mitigate them builds your credibility
There are always known risks and unknown risks, a good plan leaves room for both
Some funders look at the team first, and throw the plan away if they don’t impress
Even if you’re the only employee of your business, you’re probably not the the only member of your team
Build a team with good credentials and good contacts – it’s your support system and it builds confidence with investors
Can you sell 500 pounds of sausage a week? How do you know? What makes you think so?
Nobody knows the future for sure, but you must build a convincing case for the numbers in your plan
Use comparables, competitors, primary data, anything you can get, and document it
They read it first, so you write it last, after you’ve done all the rest of the hard work
This is your first and sometimes only chance to capture the interest of a funder
Present key data
Don’t contradict the summary later in the plan
Provide a compelling case for why you will succeed, but don’t sound like you’re selling
Obfuscate the financials
Ignore the risks
Go it alone
Don’t support your assumptions
Phone in the executive summary
If your investors don’t get what you’re about, nobody’s going to be happy
Sustainability and social good are not excuses for sloppy math or non-functional businesses
Want to run a non-profit organization? It’s harder, and the paperwork is much worse
You owe it to your community and to make your business work (oh yeah, and your investors, too) – your business plan is your promise to both
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Sprout Lenders www.sproutlenders.com
David Karp [email protected]