Page 132 - Business Plans that Work A Guide for Small Business

Team: The Key to Success • 123

of the table should explain why the compensation is appropriate. Many
entrepreneurs choose not to pay themselves in the early months. Although
this strategy conserves cash flow, it would misrepresent the individual’s
worth to the organization. Therefore, the table should contain what sal-
ary the employee is due, and then if deemed necessary that salary can be
deferred until a time when cash flow is strong. Another column, which
can be powerful, shows what the person’s current or most recent compen-
sation was and what she will be paid in the new company. We are most
impressed when we see highly qualified entrepreneurs taking a smaller
salary than at their previous job. It suggests that the entrepreneur really
believes in the upside payoff the company’s growth will generate. Of
course, the entrepreneur plans on increasing this salary as the venture
grows and starts to thrive. As such, the description of the schedule should
underscore the plan to increase salaries in the future. It is also a good idea
to hold stock aside for future key hires and establish a stock option pool
for lower-level but critical employees, such as software engineers. It is not
uncommon to see a management set-aside of 15 percent of the company
in addition to any that equity team members may buy. Again, the plan
should discuss such provisions. Let’s take a look at the Lazybones team
section.

Lazybones Management Team Plan

Section 7: the team

management Plan
The growth trajectory laid out in this plan will introduce
Nicely lays out
significant management challenges to the company. Our what the company needs
rapid growth will demand that each new store, both owned in management talent.
Although it appears that
and franchised, require little unanticipated week-to-week the team is overlooking a
support. We will depend on managers and franchisees to gap on the leadership team.
do much of the local problem solving on their own, so we As noted in the previous
chapter, some high-level
need strong leadership from Human Resources in finding and person to oversee training
is imperative.
hiring these people.
Our information technology (IT) systems need to be The expert IT system
will need to scale as the
reliable and stable as we grow, and there is a significant Web company grows. Thus La-
component to our plans both operationally and marketing- zybones should be thinking
about who and when they
wise. As we embark on an aggressive growth plan, we might bring in a CTO-level
have added Joel Pedlikin, who has 10 years of leadership person.