In our last post we mentioned that entrepreneurs must recognize and overcome a variety of challenges in order to achieve their growth-oriented objectives and that researchers had neatly bundled those challenges into descriptive categories such as resource acquisition and allocation, work flow, human relations, technical mastery, market strategy, public relations and achieving and maintaining financial viability.
While in practice it is difficult to draw lines between each of these categories they do provide a starting point for analyzing the needs of a new business and communicating a story to potential investors. For example, entrepreneurs need to be able to explain to investors what will be needed in terms of capital, human resources, assets and information in order for the business to be successfully launched and operated. While presumably investors are being contacted to address the capital requirements of the business the money won’t be forthcoming unless the investors are satisfied about the entrepreneur’s plans for acquiring the right people and technology and are convinced that the entrepreneur has the skills necessary to deploy and manage the human and technological resources so that milestones in the business plan can be achieved on a timely basis. Entrepreneurs often lack the details that investors require with respect to how the money will be spent and have difficulty explaining to investors how they intend to organize work activities, motivate their employees and achieve the level of technical mastery necessary to create high quality products and services.
In order to avoid problems, entrepreneurs need to go beyond head count projections and be prepared to show investors how the new company's critical first product development project will be managed. While sophisticated investors will understand that things don't always go as planned, they will be interested in how the entrepreneur approaches and explains the development process and will want to understand the key assumptions that the entrepreneur is making and how they are impacting the timetables and budgets in the new company's business plan.