To complement this description resumes are often included as an appendix

To complement this description resumes are often

This preview shows page 178 - 180 out of 204 pages.

To complement this description, resumes are often included as an appendix. Advisory Boards, Board of Directors, Strategic Partners, and External Members To enhance the team‟s credentials, many entrepreneurs find that they are more attractive to investors if they have strong advisory boards. In building an advisory board, identify individuals with relevant experience within your industry. Industry experts provide legitimacy to your new business as well as strong technical advice. Other advisory board members may bring other skills, such as financial, legal, or management expertise. Moreover, if your firm has a strategic supplier or key customer, it may make sense to invite them to join your advisory board. Typically, these individuals are remunerated with a small equity stake and compensation for any organized meetings. By law, most organization types require a board of directors whose primary role is to oversee the company on behalf of the investors. Therefore, the business plan needs to briefly describe the size of the board, its role within the organization, and any current board members. Most major investors will require one or more board seats. Usually, the lead entrepreneur and one or more inside company members will also have board seats. The average numbers of directors for a startup is five. Compensation and Ownership A capstone to the team section should be a table containing key team members by role, compensation, and ownership equity. A brief description should explain why the compensation is appropriate. Critical Risks Every new venture faces a number of risks that may threaten its survival. There are a number of threats that should be acknowledged otherwise investors will believe that the entrepreneur is naive or untrustworthy and may possibly withhold investment. How should you present these critical risks without scaring your investors? Identify the risk and then state your contingency plan.
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179 Critical risks are critical assumptions; factors that need to happen if your venture is to succeed as currently planned. The critical assumptions vary from one company to another, but some common categories are: Market Interest and Growth Potential, Competitor Actions and Retaliation, Time and Cost of Development, Operating Expenses, Availability and Timing of Financing. EXHIBIT 8.7 Sample Critical Risk for The History Shoppe Highly Competitive Industry The book and video industries are highly competitive across many different channels, including superstores, independent stores, Internet retailers, book clubs, and specialty stores. Many of these competitors have been in business for many years, have developed significant brand recognition and loyal customers, and have substantial resources to promote their products.
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