Planning not just a numbers game

If you've been putting off writing that business plan because you're just not sure how to plug-in future dollars and cents, a recent article in June Money magazine says don't sweat the numbers. "The most crucial aspect of your business plan is you: your skills and experience and your ability to make the case for your business," writes author Kathleen Ryan O'Connor in answer to a business-planning question. Fred E. Wainwright, executive director of the Center for Private Equity and Entrepreneurship at Dartmouth's Tuck School of Business, says the relationship between an entrepreneur and investors is like a marriage. "Rapport, patience, and communication skills are essential," he says. Next in importance in your business plan is market size so you can generate confidence and show that your plan and business is worth the investment, and you should back up your market size assumptions with focus groups, surveys, industry reports, and customer feedback. Don't, Wainwright says, try to impress potential investors with numbers you can project -- but not accurately predict. "Nothing makes an investor's eyes glaze over like financial projections five years out that are in dollars and cents," he says. "Investors like having the sense that the entrepreneur is committed to underpromising and overdelivering in financial performance rather than attempting to guess or impress with faulty estimates."

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