Why is the Management Section in Your Business Plan so Important?

When thinking about writing a business plan in order to achieve outside funding from venture capitalists or angel investors, you should keep in mind the fact that the section that is generally disregarded by entrepreneurs, the one of the management team, is actually the most important section for the investor. You may have the impression that the business idea or the amounts of money you have or you need are more important, but you are wrong.

Click here to download the Business Plan Template for your venture <==== One of the first arguments we will provide is the one of Key Man Insurance. You may not know it, but investors ask entrepreneurs to insure their key man for the business after signing the deal. This only proves that the persons working for a project are more important than the project itself. Because a good idea cannot become reality unless it is ran by capable persons. Even if itΓÇÖs difficult to believe it, investors most commonly fund persons, not projects. Of course the idea is essential, but, unless it has a powerful management, it will most likely be discarded. Good managers not only have the know-how in a specific area of activity, they also have the capacity of collaborating well with people. They are able to run a team in the most satisfactory way. This is the most powerful card you have when submitting your business plan to an investor. Because the right team and a valuable idea you can help you reach the imposed target. But, a less capable manager with a great idea is one of the shortest ways to disaster. This is why you should include a very detailed description of your management team in your business plan. You should write information about the previous work experience of your managers, about their qualifications and current responsibilities, about their education, awards and certificates and about the ways in which they have been involved in your community by that moment. By doing this, you can offer a guarantee to investors about the quality of your team and about its possible accomplishments. Moreover, you should also think about a backup plan in case one of your essential managers is out of the office for a shorter or longer period of time. This means being able to provide training manuals for the eventuality of somebody taking over the tasks of one of your managers, a hiring plan that can allow you to recruit and train new efficient personnel, and never stop networking about the terrific work environment you provide in order for you to be sure that there will always be a constant amount of demands for jobs in your company. Another aspect you should think about is whether or not you will be one of the managers. There is a visible difference between the person who runs a company and the person who founded it. And, if you donΓÇÖt have the necessary expertise as to run your business properly, than you should let somebody else do it. Mentions about how the company will be run are also elements to be mentioned in your business plan along with your strategic direction. Click here to download the Business Plan Template for your venture <==== The thing you should not forget is that there is a huge difference between venture capitalists and angels as it is only venture capital firms that provide external management for the funded project whereas angels only rarely get involved in the running of the businesses they fund. But this doesnΓÇÖt mean that either of them will do anything else first besides checking the management section in your business plan.


  1. ΓÇ£It is true that this section of the business plan is very important for investors. Your team members show the potential of growth of you company. But the situation can differ. It depends how high-tech your project is. If you are in the electric car industry and you cannot provide at least one specialist, then your chances of obtaining funds are rather small. But if your project is more about the client service industry, than your situation is not as bad because your team members can still have lots of experience and, with a little training, they can become just as powerful and convincing as they should be in order to grow your business. Anyways, if your project is really good and you manage to obtain funding, investors will most likely provide you a list of specialists to consult or to hire. This should actually be the answer to provide if being asked about it during the pitch. You should acknowledge the fact that you are aware that your personnel can still be improved and that you are actually working on that at the moment. In this case, you should be able to provide some names if they want to keep digging into the matter.ΓÇ¥

  2. What should I do in order to to turn investors away in the case in which my team is consisted of educated people but who are not the best in the world? How much is this aspect going to affect my chances of obtaining funds?

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