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As a Mentor, What are the top 5 questions you ask an Entrepreneur to assess his or her business plan correctly?

I have been assisting many entrepreneurs since I have created my mentor account, but I believe there should be a baseline of things to ask an entrepreneur while guiding them through your mentoring. What are your top go-to questions or focal points on this subject? I would love to hear from my fellow mentors and see how they handle this concept.

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Hi Hassan:

Thanks for starting a thread. I don't believe the first question I would ask is if their business plan is done correctly. Before creating a business plan, should know if there is a need for their product/service. What made them want to offer the product/service. Know the story behind their ideas. Is there a market for it. How will they make money. What is their business model. How will they acquire their first customer. Do they have an MVP. How did they go about getting out there and testing to see the need of their product/service. Gauge how much customers would pay for product/service. Costs of product/service. How will they retain customers. Who will be on their leadership team. Many investors want to see traction, thought out plan, financial forecasts that include high margins to get a favorable ROI. It also depends on the route in which a person is seeking funding: family/friends/fools; angel investors; VC; small business loans, etc. It's better to have shown you can make sales, generate revenue bootstrapping to then get the big money. These are the types of questions that help outline to create a business plan.

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Or rather to continuously make modifications as things change and evolve quickly within your business plan. Short corporate capability statements, one page overviews, teasers can give a quick snap shot into whether it whets the appetite for investors to want to see further and dive into your business plan. No two investors are the same. 1 may invest because of the people. 1 may invest simply because of the types of returns they see year over year. Criteria to assess business plans can be subjective as a person would really need to be an expert to provide insights into what people are really trying to do in certain specific industries/sectors. Or just look at the amount a person is asking for and say no. Sadly, I have seen this happen quite a few times. There is no true one size fits all to measure as each product/industry/service/sector are different.

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Very interesting points you brought up Kim, I really appreciate your input and I do agree with everything you have written out. This kind of thread allows anyone and everyone to learn many small tips and tricks to reach a well-polished business plan without needing to constantly go through different Mentors and wait for their responses. I am not saying "let's undermine the point of this website", instead I am saying if anyone reads hints and tips like yours, they are more likely to get better and more clear ideas to implement into their business plan before seeking further professional help. I hope more mentors chime in on this thread and feel free to add anything they want to share in advice or structural inputs towards the topic! :)

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Hi Hassan,

Thank you. I agree, definitely not to undermine. It is a platform to have a plethora of knowledge and experience shared and it is indeed only better for all to learn and grow from Mentors and Mentees a like. A business plan is a document full of words. A guideline, which is evolves. In order for it (BP) to be successful, there has to be execution. Execution allows for performance assessments, make changes, updates, pivot, etc. accordingly.

Cheers

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Below are the simple questions I use to develop a client's potential idea for a business.

  1. Do you have a product or service niche in mind?

  2. Do you believe you have a market for 1 above and the means to reach it?

  3. Are you willing to develop a business plan to validate 1 and 2 above before you launch?

  4. Can profile your target customer?

  5. How do you plan to differentiate your business from the competition?

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I have to agree with Kenneth. These are the basic fundamental issues that determine whether an entrepreneur is ready to get started and has invested the time and effort. If the individual has done a proper SWOT analysis, even better. That allows focus, direction, identification of short and long term goals, and confidence.

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Waoh..... A whole learning happening here.. All that has been shared i right. My approach is normally 3 pronged. THE DRIVER - i inquire on the person to understand why the choice of the business (product/service). Is it passion or profession led. THE VEHICLE - The choice of business. Why that niche. Here all the qns discussed on this thread applies and thirdly THE ROUTE - This is purely the business strategy.....

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I have 4 articles I wrote for startups I share with them to assist in focusing Genesis Authored by Gavin Tonks Celebrating small business month WC576

And in the beginning was the idea…..

Well not just any idea has the potential to be a business. A business needs to eventually drive a profit, sustain you and the company created, as the vehicle to do the business from this idea.

Many people have really good ideas, some brilliant and some just plain stupid, like the guy who had a micro trading store and thought that his business, in two years would be big enough, to give a large retailer doing billions of turnover a serious run for their money, after a 50 000 financial injection.

Entrepreneurs all too often confuse the words, “idea” and “business.” An idea is a thought process, a dream or a concept that has becoming mixed in the conscious part of the brain as having some commercial worth.

A business is an entity that drives commercial transactions and exists to generate income. The business has a market, a plan and a way to ensure that people who like the business support it with their financial transactions. These transactions result in generating turnover and if we are lucky “profit” and if you are seriously fortunate, wealth and some form of valuable asset.

Ideas on their own in the business world typically have no value and even Richard Branson has publicly thanked all the people who have sent him good ideas.

If you wish to sell or trade or generate income from your idea it requires presentation. The presentation highlights how it will perform as a business.

There are fundamental questions that must be asked with any idea.

• How many people will buy into the idea? • What is the perceived transaction value and why would people pay this amount for the idea? • How many ideas can be sold a day? • Can you make enough ideas a day, to meet this demand? • What will happen when other people see your idea works? • Can this idea generate sufficient profit to run a business? • Finally, would you buy one of your own ideas and put down hard money for it?

Many people with solid ideas, sold their houses, mortgaged everything they had, and believed with the determination of Job to make it a success. The other half believes their idea is now “THE ONE.” They are hoping some rich philanthroper will say, “I have waited my whole life, for this idea, here is a huge wad of money. Now I will spend a lot more money and turn this into a huge profit, which, I because I am nice, will give you more of.

Then as you are the generator of this idea and from the kindness of my heart, I will let you earn more money from my hard work on your idea, because it was your idea and have contributed nothing since, to its success.

Would you do it? So why do you think someone else would?

Phase one of the entrepreneurial business journey is to make a list of ideas. From this list see which of the ideas, could make a commercial business feasible.

Evaluate the shortlisted ideas, and identify which idea you would “buy into.” Once you have the one, commit all your resources to making a feasibility and business plan. The planning here saves millions in heartache, stress and wasted resources.

If in the business plan you can prove a commercial success, and then consider the journey just begun.

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article 2 - SO YOU NOW THINK YOU HAVE THE RIGHT IDEA GAVIN TONKS WC 416

What is the right idea………………

Ideas are ten a penny and not every idea is reinventing the wheel, McDonalds and Burger King did not invent a hamburger they just found ways to make them faster, sell quicker and more of them than anyone before.

So what’s your idea? A new cell phone, an app, a website, every person dreams of the perfect business that will assail them with wealth yachts and Lear jets, sadly many will not see those dreams come true as we deal with two distinct personalities.

The salesman, he can sell anything sells the concept the idea, gets you all going but there is no delivery. He is so busy selling he has not considered all the iffy bits in his mind, like after sales, delivery and all the other effort that requires a succesful business. We have a classic example with Google phone which is sold on line but when people, needed help with problems, there was no where to go.

Salespeople are a cog in a complex environment that is a business and few salespeople make it on their own in business, despite the fact, that having a sales personality is critical to being a well rounded business person.

The entrepreneur however has a dream, a vision and passion, and with his idea in hand he creates a plan to achieve his goal which is getting his product out there sold and the money back in his bank where hopefully it stays.

Every wave that knocks an entrepreneur down will see the true die hard getting up again and coming back to stand there again this time with the proper tools. He knows that every obstacle, can be overcome and if he wants it badly enough.

The true entrepreneur also knows he can achieve his goal with well planned achievable bite sized steps within the concept of his overall vision. He will eventually stand there in the waves and turn them to his advantage.

So look again at your list of potential ideas, write a couple of words for each in terms of what you think will sell. Spend some time in selling environments and see what people are actually buying. Take specific shops and see how long the stock sits on the shelf before it moves.

These steps are critical to the success of a business and not the success or exuberance of the idea on its own.

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3 - How much of a Plan do you need to be successful in business? Author Gavin Tonks WC 2153 I am a small business mentor and have workshopped over 2000 entrepreneurs in how to take the steps to owning your own business. Much is said about business plans and planning, and many business studiously avoid using or even defining these tools, only to burn up and close without reaching their true potential. Planning and achieving business goals - If you are really serious about your business you must have a plan. You would not think of climbing a mountain without a plan so why make the biggest decision to own and run your own business without a plan? No business is really successful without a plan. It may not be written down, but it is the discipline for which you achieve the business of success, wealth and sustainability. In business this is called a “strategic plan.”

What is a Strategic Plan? A strategic plan is the research and the map, you would make, if say you were looking for an address in a strange city and country. I sincerely hope you would not fly, into the country and try and find the place without some sort of plan and budget. So then why do so many people think they are able to run a business this way when they go into business for themselves?

The strategic plan is the map you draw, so everyone knows what page the business is on. It is a guide and the instructions that allow each member of the business to function in a framework, from serving customers to sustained profitability.

The plan is a tried and tested management tool that assists in problem solving and market planning. The guide sets out clearly who you should be targeting for business and how to achieve these targets. Some key focus areas would be for instance, • How much stock should I have? • Who is my client and how do I reach them? • What is the language the business needs to develop to speak to suppliers and customers alike? • These strategies must be backed up by facts, like:-

• How many people can the business sell to? • Is their sufficient interest in the market for my products, and how do I know this? • This Plan would be supported by answering a number of questions like:-

What is my business vision, and how does the business vision relate to say finance, employees, stock and customer relations?

The business vision must be realistic, with examples like if we can achieve a turnover of R1, 2 million in five years, we will need R800 000.00, unencumbered working capital, where then is this money coming from and how will the business accumulate it?

Then we have many mundane questions which some are-

1 - What do we do best, or better than any one of our competitors, and where do we excel, within the business at what we do? 2 - What is our real, or core business? Do we sell products or services that bring in the profit the business exists on? 3 - Where is our value proposition, why customers support this business and not another business? 4 - What kind of image does the business need to trade and reflect the standards it has adopted, to be relevant to our customers? What is the message we give our clients once they have done business with us? 5 - Who should our customers be, and why? 6 - How big can we get, and where should this business be in 5 years’ time? How much can we realistically get of the current market of our business in Rands / dollars and units? 7 - How many products must we have, in stock and able to sell and deliver / invoice to be profitable and sustainable? 8 - What value do we give in return for the business we get from our customers, suppliers and distributors?

These questions help us to formulate a plan in order to allocate the resources of the company.

The allocation of resources could be staff for instance so questions we would ask are - How many people do we need, and when do we employ them? What skills are required of these people? Or how do we spend the money the business generates?

Other resources in marketing would define how we would beat and avoid competition – Every business has competition, and you need to be the best at your game, to hold and grow your slice of the business pie.

How do you achieve this? Can you put into words what it is you are doing that achieves this business?

In order to determine the business path, the business needs to know a lot about itself, and this self-analysis is encapsulated in the "strategic plan." This plan requires thought and innovation to survive difficult times and the demands of puberty [yes puberty especially in new business that are experiencing growing pains] on the business.

• Evaluating the business must determine information like how positive is the company’s cash flow now, what it was like before and how it will growth and impact on future cash flows for instance. The Situation the business is in now - previously and the future potential – evaluating this information helps us to understand the dynamics of the business and what “makes it tick” in order to succeed or fail.

• The Target – You really do need to define the goals or targets in terms of turnover and resources. I saw this as a furniture store manager, it is amazing how you can achieve something you set out to do and especially if you know your business life depends on it.

• The Path – the big picture, and the steps and paths required to achieve what you are setting out to do. You may wish to work for the president, but if you do not know with whom to speak to? Or what work is available, then this is an unrealistic goal. Planning will put you in touch with the correct person and be able to have a pitch ready for them as part of a sale strategy to achieve your goal of selling to the president.

• The Plan - what resources do you need to meet with the person, you need business cards a proposal, and you may need to buy a tender document. It costs money to tender as you need, paper, ink, printing maybe a graphic designer. What happens if you do not achieve this goal where has the money come from, to cover the costs, could the business afford it? What are the risks involved of not getting the business, are these risks acceptable and can you ultimately have available resources to afford them? The company or business Vision – The business must define the vision and set a mission statement with hierarchy of goals and objectives. The vision means what are you looking to do? Think of eyes and seeing and craft the words around – What do you see the business doing and why?

The defining and writing down of actions and processes to be taken to attain these goals. I need to get a loan of Ten thousand rand; I need a company registration number. The Rize mnanzi contestant, front runner lost their rung because they had no plan and had not formulated the strategies in order to match the competition requirements of being registered. Understanding the need to write things down and do them is core to running a successful business.

Implementation of the processes – Once you have formulated what you want to do then you need to have a plan on the “How” Take the train to Pretoria and go directly to the companies registration office. Take a book keeping course, buy filing cabinets.

Finally feedback and control, monitoring and evaluate. I sent Sipho to Pretoria he could not sign as he is not a director, I should have gone myself. The day is wasted and it cost the company money, which it can ill afford.

When developing strategies, you must analysis the business organization and the environment in which it trades. You need to know what state the company is now and where it could possibly be in the future.

The issues that will affect the company when it grows in the future require planning how you will invoice the clients, delivering invoices collecting cheques, may be issues that require resolution.

The analysis of the business must look at as many factors both within the company and without, and will included the dreaded strengths, weakness, opportunity and threats.

There are areas you need to drill down and ask questions about in order to assess the business situation analysis, like: 1. Markets and your customers 2. The business Competition 3. Technologies you need or must interact with, some customers insist you work with their software for instance can you do this? 4. The Suppliers to your business and the services they may provide 5. Human resources and the people you need 6. The economy, yearly trading and feast and famine business cycles 7. Any compliance issues from registrations, training or certification your business may require

What do you focus on in your business? As the focus relates to customers, marketing and sales plans? Did you ask your client for business? How much business can your clients realistically give you? Goals, objectives and targets must be planned and achieved for success and sustainability. One of the core goals when drafting a strategic plan is to develop it in a way that is easily translatable into action plans.

Entrepreneurs and business managers are often so preoccupied with immediate issues that they lose sight of their ultimate objectives. That's why a business review or preparation of a strategic plan is a virtual necessity.

This may not be a recipe for success, but without it a business is much more likely to fail, so a sound plan should include;- • A framework for decision making • Keep everyone on the same page • Help you to achieve targets and monitor the performance of the business • A strategic plan is a process that covers the vision, mission, objectives, values, strategies and goals of the business.

The Vision The vision must be realistic, and encompass where the business will be in three to five years time. This is not something to please investors or bankers it is a serious determination of how serious you are in business. The Mission The nature of a business is expressed as the mission. In other words what are the activities of the business, like design and develop products, clean floors. Only say we are in business to make money if you have a contract to print money. Again you need to be realistic as it is your business and will feed you and give you retirement and a valuable assist of properly looked after. The Values The values of that govern your business operations, and how you will treat customers if if it is with disdain and you attempt to treat them as badly as possible like many South African companies. Although service is improving as companies realize there is a choice and walk out with your feet and spend somewhere else. The Objectives Objectives are related to the results you wish to have in your business. The objectives relate to profit margins, targets, and expectations of shareholders, growth potential offerings and markets. The Strategies The strategies cover things like diversification, acquisitions and issues like o How will the company fund future growth? o New products life spans and when do you introduce new ones? o Outsourcing as a policy in manufacture o The Goals The goal is how much business do you and can you realistically achieve. The factors governing goals encompass market size, products, finances, profitability, utilization of resources and efficiency. The boring and tedious Strengths & Weaknesses

• Sales, marketing and distribution, promotions and product support; • Management systems , expertise and resources; • Operations their efficiency, capacity and the processes; • Products and services, quality, pricing, features and benefits, range and competitiveness; • Finances, financial resources and business performance; • Research and Development, invested effort, business direction and business resources; • The costs, from basic running, productivity and purchasing; • The business systems, organization, structures and staff • Business Strategies would traditionally revolve around the following concepts • Build on strengths • Resolve weaknesses • Exploit opportunities • Avoid threats • Finally some rounding questions for your business, in order to achieve credibility in the market place:- How do you maintain your product quality and product standards? Where do you find resources, and do you re asses their price competitiveness in the market place?

Listening to customers, and creating standards they require. Ensuring your internal communications and data capture is up to scratch. Empowering your staff to be effective contributors to the business So if you are serious about being succesful know this the most succesful always have a plan.

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4 -The right stuff Author: Gavin Tonks Starting with nothing I have a new client, who wished to develop a business plan, and the first question is “Will you write it for me?” and the immediate answer is “No!” His crestfallen look deserved answers.

1 - The idea and concept behind a plan for financial request is simple, “If I had a pot of money, and wanted to make some more, by investing in some one else’s business, what questions and answers would I expect, in order to back this person and their business?”

So imagine if someone was asking you for money, be realistic and put those questions down and then answer them. You being the investor, and wanting security for your hard earned money. It is not as simple as saying, “Just give me the money; I will perform as and when I feel like it.”

2 – The same reasoning is required when asking a company or person for the confidence in you, when investing their orders in your business. How often do you buy something and say, “Would I buy from me?” If I will not buy the product from me then, how do you expect someone else to buy them from you? So I personally would ask the first question:- 1 - For and Investment - Would I get paid back? 2 - A sales and purchasing contract from the business = would they deliver the service and quality I would expect for this amount of money? Businesses forget these are the two simple reasons you write anything, and plan your business on. So getting down to basics you need to formulate a series of questions that make it clear in your mind, and then clear in an investors or clients mind, what you are selling and doing and how much will the actions of doing this business cost. There is no such thing as, “I started a business with nothing.” You need a place to work from, a means of communication and a way of getting to meetings or arranging the business. This all costs money, you may have another source of income but it is a cost of working. People said Facebook started with nothing but try and pay for server power and see how much it costs. There is no such thing as a free business, so plan the costs realistically from day one.

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Hi Hassan , Kim and all wonderful people who made such an useful contribution for a budding entrepreneur and the start ups.The one is to one mentoring is helpful , specially if the mentor has expertise and he/she knows how to coach.However instead knocking the doors for mentors if you know the base lines it may help you to seek a proper mentoring.Here are few such basic steps which brings a good result : Start by asking : 1. What specific problem this business is solving ? You may come out with an app to deliver groceries at home.Now, in this business the delivery of grocery is the physical part of the business. It is actually helping the busy office goers or home makers to curtail the hassles to go to store , pick up the stuff , pay , driving back and pulling the groceries to the door. Therefore define clearly what exact problem your business model is addressing to. Is it really exceptional or there is already many competition ? The business may look lucrative or attractive at the surface , but is it really ? 2.What are the hurdles ? Write down the business process completely. Right from inception of the concept to the completion of the product/service you are proposing.Evaluate resources and its feasibility from execution point of view. 3.Financial aspect - what seed capital ? What source ? Operation cost : fixed and variable cost. 4. What price of your product and services.This aspect is real tricky. One example if it helps.You have excruciating tooth ache and you have to go to a dentist.Which dentist you will choose ? One is just $100 but it takes two weeks to recover. Another $300 but you get cured in a day ? 5.Whats your Marketing ? Your product is ready , branding is ready but you do not have a client. Then your entire preparation is still a plan.How do you plan ? 6. Increase your operation incrementally based on your real sales. 7. Agility of personality to with stand long hours , rejection , frustration. 8. If you need a small team , see the chemistry , competency.

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I assume the focus of this discussion the starting point of a business. To me it is not business plan, but the entrepreneurial traits and related empowerment. Even great road map from idea to commercialization does't worth, if the person/team who are not capable of running business. So my preference is to evaluate the plan like a Venture Capitalist. As statistics says 80% failing, major reason absence of essential entrepreneurial traits. The next stage business related. The Value Proposition need to be clearly defined and followed by Business Model Canvass. Market surveys and research need to be done in order to complete business model canvass.

Comprehensive business plans after extensive efforts also used to fail - 80% of business plans not meet exception execution. In order to reduce risk, better to follow lean strategy - fail early, go for MVP (Minimum Viable Product) and test at early stage to know market response. The striking fact is that many products fail in the market after huge effort and investment.

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Well ! Since this is one of my professional services that I have been doing for a while now. I would like to say that I have developed a unique set of questions that need to be answered fully and as accurately as possible in order to get meaningful results; results that make sense and draw a complete picture of what the business is about. This business model descriptors methodology comes in 2 versions 1- A basic version of 10 or so questions that can be sent and answered remotely to get the preliminary picture of the business model 2- An extended version that goes in depth with 20 or more detailed questions that need to be taken on site face-to-face/eyebrow-to-eyebrow with the client. This could lead into more questions that explore unknown/unpredictable areas in depth and in detail

Yes, I know that I have not answered the question in the "step-by-step" cookbook style, But the question and the situation we are dealing with cannot be "properly" handled with half-cooked solutions that get often implemented wrongly or selectively on impression and mood basis

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While they are very similar, I believe it is important to differentiate between a business plan and a business model. The business model is the set of processes and transactions that the business needed to perform in order to be viable. The business plan is a structured description of how to implement and sustain the business model. The business model informs of how to write the business plan; it is the core of the business plan. First job is to understand the business model. That includes a lot of the suggestions in this thread, but focuses on what needs to happen, versus how to set it up.

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