10. Refining the Plan

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For Raising Capital

Lenders

No loans will be sought in the Beta Year.

Financial Investors

• Financial investors are looking for dramatic growth, and they expect to share in the rewards:
  • Funds needed short-term
  • Funds needed in two to five years
  • How the company will use the funds, and what this will accomplish for growth.
  • Estimated return on investment
  • Exit strategy for investors (buyback, sale or IPO)
  • Percent of ownership that you will give up to investors
  • Milestones or conditions that you will accept
  • Financial reporting to be provided
  • Involvement of investors on the board or in management

Intellectual Capital (IC) Investors

• IC investors have different motives and expectations than financial investors, but IC investment has real value. To date, no expectations have been indicated among volunteers, but a system of recognitions and rewards needs to be devised.
• A plan to retain the best of the volunteers as paid contractors or employees when Smart People becomes solvent also needs to be devised.

Other considerations

• Service businesses sell intangible products. They are usually more flexible than other types of businesses, but they also have higher labor costs and generally very little in fixed assets.
• Methods used to set prices need to be established.
• System of production management in place.
• Quality control procedures. Standard or accepted industry quality standards.
• Determine percent of work subcontracted to other firms. Will the magazine make a profit on subcontracting?
• Credit, payment and collections policies and procedures.
• Strategy for keeping subscription base.

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Cover • Table of Contents • Executive Summary • General Company Description • Products and Services • Marketing Plan • Operational Plan • Management and Organization • Personal Financial Statement • Startup Expenses and Capitalization • Financial Plan • Refining the Plan • Appendix A: Competing Publications