Financial Tips | Debt Management

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First, I would like to apologize for the long delay between posts. Second, I hope everybody had a great holiday season and a wonderful new year! A new year is a time for new beginnings. I know everybody has a New Year’s resolution, but always remember to stay motivated and strive to accomplish the goals that you have set for yourself and your loved ones.

And now, back to business! The Management Team section of your business plan consists of the information and experience of the persons who will be managing your idea/product/concept. The first aspect of forming this section is recognizing the various areas of your idea/product/concept that require management. This does not mean that you pick apart every single possible area of your idea/product/concept and assign a different manager for each. Remember, efficiency and effectiveness are key! A new small business does NOT require five different vice presidents. I know some of you may be laughing, but you would be surprised at the condition of some of the business plans I have read.

Second, once you have deciphered which parts of your idea/product/concept require management, you need to figure out the level of experience or education a manager needs to possess to successfully manage that area of your idea/product/concept. For example, a restaurant needs a chef that can execute the menu provided and can run the kitchen created; a front-of-the-house manager that can run the dining room and all the employees that work in the front; and a general manager that can create and regulate the communications and operations between the kitchen and the front. These position are critical is starting a new restaurant, and a potential investor will want to see some very solid credentials from these three people before he/she/it agrees to invest.

Third, do not over do it! I have read many plans that state three attorneys, two accountants, a financial advisor, and a stock broker as the management team. Although I understand that the entrepreneur is trying to convey the image and professionalism and strength, the image is flawed! If you were a potential investor and you read a business plan, for a new business, that stated all of those professionals as making up the management team, what would you think? My first question to the entrepreneur would be, “how are you going to pay those people?” Last I checked, professionals charge a lot of money. If I am investing in a new business, I do not want my investment dollars to pay the salaries of a management team that may not be necessary at your business’s current stage of development. This does not mean that all professionals should be excluded from a business plan. Sometimes, professionals are necessary based on your idea/product/concept. All I am suggesting is that you think critically and, if a professional is on your management team, that you specifically define his/her role and contribution to your idea/product/concept.

Fourth, you need to find these managers. There are many different ways to accomplish this task. First, use your connections. Some of us went to college and incurred debt in the form of student loans. While incurring this debt, I am sure that some of us made friends and created contacts. Now is the time to put your student loan dollars to work! Your diploma is important, but the connections you made in school will pay dividends here. My only note of caution is to be weary of who you pick. Choose people that will HELP manage your business! I know that sounds simple, but some people have a tendency to include random buddies just because. DO NOT DO THIS!

If you did not go to college or did not make many new contacts in college, life experiences will give you some contacts.

Second, if you do not have any contacts, you can create them. MySpace, Face Book, and other similar internet sites are a great place to meet people. You can probably develop some contacts using these services.

Third, think of yourself! Most people start a new business in a field in which they have experience. Ask yourself, “can I be a manager?” If the answer is no, you should re-evaluate your role in the business; because if you are not managing and not investing money, what use are you? A potential investor will ask you these tough questions. Make sure you are able to answer them.

Make sure that however you find your managers, you are honest with them. Do not guarantee a job when one is not currently available. Let them know that all you have is an idea/product/concept and, after reading my posts, a business plan. If they want to take the chance and join the team with no pay until the business begins, wonderful! If not, see if they WOULD join your team IF your idea/product/concept started. A commitment to manage could help.

Last, some closing thoughts. Make sure your managers and their positions are clearly defined. A manager can do more than one task, and thus increase your efficiency. Do not provide more managers then are needed or else the managers’ salaries will become an issue. Do not try to show strength by pumping your management team full of “professional power.” Professionals are highly expensive and may deter some potential investors from investing. Always remember to keep the plan neat, concise, and specific.

Next time, organizational plan and contingency plan...