Why do some management teams win and others just suck? – Part 9 of the 2009 Business Plan Series

There is a well known investing slogan, “Fund an A-Grade team with a B-Grade idea over a B-Grade Team with an A-Grade idea”. Did you get that tongue twister?

I am not talking pedigree or a minimum number of years of experience but it is the results that make the team. You want people that can execute because even the best new concept or existing plan will fail if executed poorly. The Management Team section of the business plan must prove to other parties like potential management hires, the bank or investors on why the key company personnel are “eminently qualified” to execute on the business model. The A-Grade Team can always execute and adjust along the way to make the company successful, not so much with the B-Grade team. This become a major element in differentiating why your team wins and why others, just suck.

So, do you have an A-Grade or B-Grade management team? Know the answer to this before you dive in and start writing.

What is the makeup of the management section?

The basics are key management team members, Board of Directors, Board of Advisors and any outside consultants.

BizPlanIt sums it up well:

Specific Team Members
Construct a narrative description for each team member, clarifying his or her background and intended contribution. This should include:

- Title of this position
- Duties and responsibilities of this position – what will they be doing, which functions will they be overseeing, who do they supervise, who do they report to, etc.
- Previous industry and related experience – should be those that relate directly to this new position. Who have they worked for, what were they doing, for how long did they do it, etc.
- Previous Successes ® what did they accomplish, what successful teams or projects did they spearhead, did they grow a company or a division, were they responsible for a turnaround or some new breakthrough idea.
- Education ® keep educational descriptions brief

Board of Directors
Briefly describe who is on your Board and what role they play within your company. Briefly list the names, backgrounds, and contributions that will be made by each board member.

Board of Advisors
Your board of advisors should consist of individuals with valuable industry expertise and insight, and they help and consult with you on your business. A solid and experienced board of advisors goes a long way towards building credibility in the eyes of investors. Briefly list the names, backgrounds, and contributions that will be made by each of your board members.

Consultants
The last part of your management section should include a brief mention of the outside consultants you will work with as your company grows. A typical list of consultants would include accountants, attorneys, bankers, insurance agents, and experts such as technology advisors, web developers, and payroll specialists, for example.

Explain the background of the founder(s) of the company at some length. However, limit this background information to under 1-2 a page. Stick to the facts on all your management team bios, making it evident why each person is experienced, why they hold their position and the benefits they provide your company.

Growthink also recommends “Depending upon the stage of the company, key functional areas may be missing from the team. This is acceptable provided that the plan clearly defines the roles that these individuals will play and identifies the key characteristics of the individuals that will be hired. However, it is generally not favorable if personnel are missing for ultra-critical roles. For example, a plan that is fundamentally a marketing play should not seek financing without a stellar marketing team.”

Side question – Are you writing the business plan to raise money?

Many investors base their entire investment decision on the management team behind a venture. Investors expect a well-rounded team of professionals with experience in every function critical to the business. Your management section should clearly demonstrate who each person is, why he or she is on your team, and what each person will do.

According to Growthink, “Depending upon the stage of the company, key functional areas may be missing from the team. This is acceptable provided that the plan clearly defines the roles that these individuals will play and identifies the key characteristics of the individuals that will be hired. However, it is generally not favorable if personnel are missing for ultra-critical roles. For example, a plan that is fundamentally a marketing play should not seek financing without a stellar marketing team.”

Final Thoughts – Building the A-Grade Team increases your chances of success

Many people have walked down the path of starting a business and writing the plan only to run into the wall of attracting a team that is as passionate as you are and dedicated to seeing it succeed. When I mentioned an A-Grade team