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Real Small Business: Building Your Business

VI. Management

From the Editors of Real Small Business

A good management team can take even a mediocre idea and make it fly. In fact, strong entrepreneurial teams have been known to move from business idea to business idea, repeatedly creating and running thriving companies. Conversely, weak management often cannot build a strong business out of even the best idea. For this reason, the management section of your business plan must demonstrate that the team you have assembled, or will assemble, is a winner. Each member of management must of course be talented and have experience relevant to your business, but it is also important that the people on your team have complementary skills. Description Ownership Board of Directors/Board of Advisors Support Services

Description
Use this section to describe company management including the responsibilities and expertise of each person. Many lenders and venture capitalists base their investment decisions on the strength of the company's principals. Demonstrating that your management team possesses, or will possess, an array of complementary skills will help convince investors that your business has a bright future.

For positions you have yet to fill, detail who you will need to hire to achieve the goals set out in the product development schedule. Describe the talents this person needs to possess and how the addition of that person will help the company meet its objectives.

Tips Be sure to have major categories of business management covered such as marketing, sales (including customer relations and service), production and quality assurance, research, and administration. You do not have to have personnel devoted to each of these areas, but you should have people who will be able to assume these responsibilities as needed.
Include relevant details in your management description, but save complete resumes as attachments to your plan. This will enable readers to quickly skim your management section and evaluate the strength of your team. If they are interested, they can delve deeper into management's background by reviewing their resumes.
Emphasize people who have already committed to working with your business.
Always put backgrounds in reverse chronological order - lead with your most impressive piece of experience. Some people make the mistake of leading with graduating college and ending with their recent history.
For important positions left unfilled at the time your business plan is assembled, describe necessary skills and job experience.

Ownership
A short section on who owns and controls your company will help readers derive a better understanding of who will be making decisions. Potential lenders, many of whom will require a significant stake in the company in exchange for funds, will also be interested in what portion of the company's equity is available.


Board of Directors/Board of Advisors
A strong board of directors or board of advisors is an asset to a business. It can add credibility to your management team and increase your likelihood of success. In this section, outline who is on your board, listing their names, employment, training, education, and expertise. Highlight each board members' experiences and how they will help your business thrive.

Many small business owners use the skills of board members to provide expertise and assistance they currently cannot afford to hire. If this is the case in your business, use this section of your business plan to play up the fact that your company has acquired this expertise by having a board. If the board members have industry connections, good reputations, or potential to raise capital for your business, be sure to include these facts.

Tips

Use your board of directors descriptions as an opportunity to demonstrate your good business judgment by making it clear how each member will positively impact the company.
Create a board that complements existing management. If, for example, you own a small technology company but don't have any marketing experience, for example, search for board members who can provide that help. Create a chart to determine the kind of talent needed to move your company ahead. List the skills your management possesses. You can then make a list of the skills you need to acquire and the people who possess those skills.
Avoid the common mistake of creating a board of directors made up of friends. Make a list of your needs first and then slot friends and colleagues in as appropriate, not the other way around.
If you have not formed a board of directors or advisors yet, use this section to discuss the kind of talent and experience you plan to assemble for your board.

Support Services
Strong support services - including attorneys, accountants, advertising agencies, as well as industry-specific services - help indicate others' faith in your business as well as your ability to attract talent to your business. Having support services in place also indicates to readers of your plan that you have thought through all of the support you will need for the business to thrive. In your description of each support service, describe what strengths the company or individual possesses, as well as what experience or contacts they bring to your company.

Tips Ask industry peers for the name of the best support services for your industry.
Read trade magazines to find the names of "hot" firms that will add clout to your business plan.
Start-up firms will often take on other start-ups. If you can find a start-up support services company founded by high flyers, this will add cachet to your business.
Be sure to mention education when it will carry the most clout. For example, business and law degrees are evaluated heavily based on the institution from which they were earned, so if you are bringing in lawyers or MBAs, mention their Alma Maters.