Management Plan

Management Plan

Guidelines for Preparing This Section
Investors often assert that there are three attributes important for a successful
start-up business: management, management, and management. Many claim
they will invest in a strong management team with a mediocre idea, but will
decline to fund a weak management team with a great idea. The purpose of the
Management section therefore is to convince the reader that you have a great
management team to complement a great business concept.

This is not the place for modesty or self-deprecation. Be honest, but highlight
your accomplishments and your capabilities while mitigating any obvious
shortcomings or weaknesses. For example, if you are young and inexperienced,
accentuate your energy, capacity for hard work, and willingness to learn, while
downplaying your lack of experience. When readers are finished with this
section, you want them to be confident that your venture is in good hands and
will be competently managed — by you!
Sources of Information
• Resumes
• Interviews with investors

Company Organization
Describe how your company will be organized.
• Prepare an organization chart.
• Will you have a board of directors? Who will be on it? What will be their
• Will you have a board of advisors? Who will be on it? What will be their
• What is the ownership structure of your company? What percent of the
company do each of the founders own?
• Do you plan to have a stock option plan? If so, describe how the plan will
be organized and how large a pool of shares is needed.
Management Team
Describe the founders and principal managers who will run your firm.
Write a short paragraph on each of the key managers?
• What will be their duties and responsibilities?
• What unique skills do they bring to the venture?
• How will they be compensated?
Is there a significant “hole” in the team? How do you propose to fill it?

Competitive Advantage
Guidelines for Preparing This Section
One of the most difficult, but essential, tasks that entrepreneurs face is to explain
their competitive advantage. This results primarily from an inability or
unwillingness to look honestly at the competitive environment. If you have
conducted an industry analysis as suggested in this Plan then you should be in a
good position to define your competitive advantage.

A second reason this is difficult is that by virtue of you being successful you will
create competition. How can you sustain your competitive advantage when
strong competitors appear?

The following are potential competitive advantages to consider. All of these are
not equal because they either are not sustainable or can be easily duplicated by
your competitors:

Strong Competitive Advantages
• Intellectual property
• Agreements with customers or suppliers
• Long term contracts
Credible Competitive Advantages
• Control of costs
• Control of prices
• Control of channel
• Location
• World class management
• Expertise
Difficult Competitive Advantages
• First to market
• Development lead time
• Brand
• Quality
• Service
• Execution
• Relationships

Sustainable Competitive Advantage
Identify the venture’s resources:
• Financial: access to capital (equity & debt), cash reserves, government
grants, etc.
• Physical assets: plant & equipment, raw materials, location, working
capital, etc.
• Human: social, employee knowledge, experience, accumulated wisdom,
labor cost and skills, etc.
• Intangible: patents, trade secrets, know-how, copyrights, databases, etc.
• Organizational: culture, contacts, policies, Boards of Directors & Advisors,
suppliers, service providers, etc.

Identify the venture’s capabilities:
• World class management (serial entrepreneur)
• Well developed, high-quality, accessible contacts that take years to build
• Sales and marketing experience
• Science or technology expertise
• Supply chain expertise
• Product/service design expertise
• Sales & distribution organization
• Total operational approach (e.g. Dell, Wal-Mart)
• Etc.

What barriers can you establish that would restrict entry into of competition?
• Intellectual property: patents, trade secrets, copyrights, trademarks, etc
• Switching costs to your target market
• Customer loyalty
• Agreements with customers, suppliers, strategic partners
• Control of the distribution channel
• Etc.