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Business_Planning_for_College_Students_and_First Time_Entrepreneurs
| Business Planning for College Students and First-Time Entrepreneurs
More and more students, both in undergraduate and graduate
institutions, are deciding to launch their own ventures upon
graduation rather than taking the traditional route of working
for another firm. Likewise, more and more individuals are
leaving their jobs to fulfill their entrepreneurial dreams.
While these ventures may ultimately be very successful (e.g.,
Google and Microsoft were both launched by students), they face
certain challenges in their business plans and capital raising
processes. The foremost challenge is overcoming the lack of
experience of the management team. A classis chicken-and-egg
problem presents itself – the management team has no past
company successes to point to, and can’t prove itself unless
given the opportunity to launch the business. While this problem
is nearly always the case for graduating students, it also
presents itself to many entrepreneurs, particularly those who
are launching their first ventures.
To overcome this challenge, these ventures must represent
themselves as having a great team by attracting a stellar
management team and/or advisors. By attracting a quality
management team, even if the team will not start until after
financing, it gives investors that confidence that the plan will
be properly executed. It also proves that the entrepreneurs have
the ability to “sell” others on their vision. The management
team need not be complete before seeking capital, since
additional members will most likely be added after capital is
raised. For instance, shortly after Google raised capital from
Sequoia Capital and Kleiner Perkins Caufield & Byers, Omid
Kordestani left Netscape to accept a position as vice president
of business development and sales, and Urs Hölzle was hired away
from UC Santa Barbara as vice president of engineering.
Attracting high-quality advisors builds great credibility since
if respected individuals are willing to risk their reputations
by taking an advisory position, the venture must have some
merit. Advisors can also help with the execution of the business
and sometimes will also provide the needed capital. In Google’s
case, when no major portal was interested in partnering with or
funding the company, Larry Page and Sergey Brin were able to
convince Andy Bechtolsheim, one of the founders of Sun
Microsystems, to become an advisor and investor. Bechtolsheim
contributed the initial $100,000 to the company.
Even if the venture is able to attract quality management teams
and advisors, it will always be at a disadvantage versus other
ventures headed by entrepreneurs who have “been there, done
that” successfully in the past. To compensate for this, these
ventures must really know their customers, know their market and
know their competition. By possessing an in depth knowledge of
the external factors that will effect the company’s success, the
entrepreneurs can both create a solid business strategy and
convince investors that an opportunity really exists. If the
opportunity truly exists, then investors know that even if the
venture is initially mismanaged, then they can hire additional
managers later to put it back on course.
In summary, when students or first time entrepreneurs, begin
developing their business strategies and plans, they must
compensate for the management deficiencies they possess versus
established entrepreneurs. By doing this and showing a
comprehensive knowledge of their market, these ventures can
level the capital raising playing field. Fortunately, these
ventures can point to a long list of other successful companies
which were launched by students and/or first time entrepreneurs
most notably Google and Microsoft.
About the author:
As President of Growthink, Dave Lavinsky has helped the company
become one of the premier business plan development firms. Since
its inception, Growthink has developed over 200 business plans.
Growthink clients have collectively raised over $750 million in
financing, launched numerous new product and service lines and
gained competitive advantage and market share. For more
information please visit http://www.growthink.com
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