Page 29 - Business Plans that Work A Guide for Small Business

20 • Business Plans that Work

market’s size and 20-plus percent growth potential, the economics of the
busi ness, particularly robust margins (40 percent or more); and free cash
flow characteristics.
In short, the greater the growth, size, durability, and robustness of
the gross and net margins and free cash flow, the greater the opportunity.
The more imperfect the market, the greater the opportunity. The greater
the rate of change, the discontinuities, and chaos, the greater is the op-
portunity. The greater the inconsistencies in existing service and quality,
in lead times and lag times, and the greater the vacuums and gaps in in-
formation and knowledge, the greater is the opportunity.

Resources: Creative and Parsimonious

One of the most common misconceptions among untried entrepreneurs
is that you must first have all the resources in place, especially the money,
to succeed with a venture. Thinking money first is a big mistake. Money
follows high-potential opportunities conceived of and led by a strong
management team. Investors have bemoaned for years that there is too
much money chasing too few deals. In other words, there is a shortage
of quality entrepreneurs and opportunities, not money. Successful entre-
preneurs devise ingeniously creative and stingy strategies to marshal and
gain control of resources (Fig. 1.4). Surprising as it may sound, investors
and successful entrepreneurs often say one of the worst things that can
happen to an entrepreneur is to have too much money too early.
Bootstrapping is a way of life in entrepreneurial companies and can
create a significant competitive advantage. Doing more with less is a pow-
erful com petitive weapon. Successful entrepreneurs try to minimize and
control resources, not necessarily own them. Whether it is assets for the

Figure 1.4 Understand and Marshal Resources, Don't Be Driven by Them

Minimize and Control Resources
versus
Maximize and Own
Unleashing creativity
Financial resources
Assets Think cash last!
People
Your business plan