The Apprentice: How Not To Write A Start Up Business Plan - Hampshire Workspace

19 December 2014
Comments: 1
Photo of Lord Sugar

Difficult decision, Lord Sugar

Neither of the two finalists in The Apprentice would have attracted business investment in the real world. Here’s what investors with £250,000 really look for in a start up.

Firstly, you need a unique product– not just unique in the sense of filling a gap in the market but also something that others will not be able to imitate. This means you need intellectual property, patents or an exclusive commercial arrangement in place.

That’s where poor Roisin went wrong. Her idea for a diet product to fill a gap as well as stomachs might have been a good one that could have been patented except there was no gap- an identical product already existed. Which leads me to a second point.

Don’t launch your idea too early. Research and test. Oh, and asking six friends doesn’t constitute research. Testing means making sure your product is ready to go to market. Investors don’t want to put their precious money into further R&D.

Take a good look at the market for your product or service. Investors prefer a growing market, that’s why they love software and technology, especially medical technology. They are also looking for scalability, in other words a product or service that will work at a bigger even global level. So a business that relies on you carving wooden Topsy dolls is not scalable whereas an app inspired by Topsy could just grow and grow.

And fast. There’s no such thing as long term investment and slow growth for investors. They want to get their money back and a profit within three or at worse five years. They would like to see that you have a plan for launching an IPO (Initial Public Offering) or maybe a buy out.

Keep it simple. You need one idea that can you can explain to non-experts. Don’t complicate it with two products. That can come later. Bianca almost messed up by talking about to distinct product offerings.

An authoritative, fully costed business plan is essential. Six pages with three pages of pretty pictures won’t cut it, Solomon. The plan must show how the business is going to make money. Claude wasn’t happy that Roisin’s business plan showed she was going to run out of money in the second year.

Some other points. Investors will have more confidence in you if you put in some of your own money. Also, bring on board at least one experienced businessperson because even a really good idea will fail if investors have no confidence in the management team. They are attracted to a project that involves someone with experience of launching and selling companies.

Think about offering Liquidation Preferential Multiples. This means investors will get more of their money back than other shareholders if things go wrong. This could make a difference to the attraction of your proposal but be careful not to go too high.

So what about the finalists? Mark may well be the best salesperson in the country at selling Search Engine Optimisation and therefore his business could be successful on a small scale. However it is a crowded market so the service is not unique and it is not scalable because it relies on his talent. So a sensible investor would be highly unlikely to have anything to do with it.

Bianca does have a good track record- her current company is a top 100 start up- and her idea is a good one. However, as far as I can see, there is nothing to stop other bigger companies from imitating the idea of manufacturing hosiery to match the colour of people with darker or lighter skin than the most common types.

I don’t see a genuine investor choosing either of these startups. Fortunately this is only TV entertainment. Difficult decision, Lord Sugar.

This blog was written by Paul Lewis, owner of the Winchester based marketing consultancy Seven Experience. You can connect with him on Google+ and LinkedIn

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One response on “The Apprentice: How Not To Write A Start Up Business Plan

  1. […] How to write a business plan that will attract investors to your start up, maybe even Lord Sugar of The Apprentice  […]

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