Life is full of lessons; we get new ones every day. I learned many of my lessons many years after the teaching event. In other words, I learned my lessons too late to help myself, and only after deep reflection on past events. I have a lot of these, as I am past retirement age.

We started a company in 1978 to sell Enterprise Resource Planning (ERP) software to manufacturing companies, with implementation and training services as our value add. At the time, the transition from service bureaus to mini-computers had just begun, and we intended to take advantage of the trend. A typical sale in those days was a bundled package of hardware, software, and professional services. Before we started operations, we had executed a reseller agreement with Digital Equipment Corporation (DEC) for hardware, and licensed a complete set of accounting software from Mini Computer Business Applications (MCBA). We could not find manufacturing software that met our needs, so we became a software development firm as well, and built a development staff soon after startup.

As with any startup, nothing was more valuable than a sales prospect. We directed our marketing entirely at manufacturers. From time-to-time, DEC would refer a distribution prospect to us. We sold several of these and developed the distribution functionality they needed. This digression did not dilute our efforts, since manufacturers needed the additional distribution functionally as well.

About two years after we began operations, a big opportunity — or temptation, depending on your point of view — arrived. Our DEC salesperson called and asked if we would take a lead in the vending industry. While a vending company is a distributor, they have routes that serve mini retail stores (a.k.a., vending machines). They require unique software. We had a meeting with the prospect and found that he also had friendly relationships with vending companies in other cities. We took the plunge, sold the prospect, and developed the software. We quickly got other vending customers and became a presence in the vending software business. We spun the business off, and the company is still in business today. Sounds like a success story, right?

The manufacturing software company also grew rapidly, making the Inc. 500 list in ’84 and ’85. It acquired venture capital in ’88 went public in ’94. Finally, after 21 years of operations, a European ERP company acquired it in ’99 during the great ERP consolidation. Sounds like a success, right?

Here’s where the hindsight comes in.

The lost opportunity was in the manufacturing software company. If the vending customers had been manufacturing companies, our manufacturing customer base would have been almost 40% larger. We could have invested more in the manufacturing software earlier, resulting in increased competitiveness, and consequently, even more customers. The manufacturing software company would have gone public at a higher valuation. The vending software opportunity, even though it became a new business, was a diversion that decreased total value.

Increasing product lines or expanding into new markets is a temptation that is difficult to resist. I have spoken with many entrepreneurs who were trying to do too much. I cannot remember any that were trying to do too little. Focus has to be on the minimum number of products and the minimum number of markets that still enable you to attain your financial goals. Anything else can create diversions that increase risk and reduce your overall financial success.

As a business plan consultant for both non-profit and for-profit startups, I find that non-profit founders, like for-profit entrepreneurs, are looking for experienced help in crafting their business plans. They see the value in strengthening their strategies for fundraising, board development, operations, and marketing before presenting to partners and funders. If you are an aspiring non-profit founder, it is vital that you understand four key differences between for-profit and non-profit plans.

1. Your non-profit must sell to TWO separate markets:

One market is your customers/clients/constituents who receive services and the second is your organization’s funders and funding partners. These are generally two very separate groups (those in need and those with the means to give) and each requires a  distinct marketing strategy to reach them. While flyers and good street presence may be all that is needed to reach your clients, an internet presence and networking may be what is needed to reach your funders. The first marketing strategy is generally covered in a ‘Marketing Plan’ section and the second in a ‘Fundraising Plan’ section.

2. Your non-profit plan must include ‘Outcomes and Evaluation’:

Your non-profit’s results are much more difficult to measure and explain than a for-profit company’s. Growth in the size of your budget is less relevant than the extent to which your organization fulfills its charitable mission. Your challenge is to find specific, quantifiable ways to measure this mission fulfillment through related indicators. For example, a charter school may seek to increase its students eventual college enrollment rates, but must settle for measuring improvements in test scores for many years until it graduates its first class.  Your non-profit plan must demonstrate what the key metrics are and the specific target numbers (‘Outcomes’), as well as the plan for when and how those metrics will be measured by your organization or by others (‘Evaluation’). This section of the plan will be in addition to a full financial rundown.

3. Increased importance of your Board:

Your non-profit’s Board of Directors is not only an advisory body, but a group that is legally responsible for the activities of the non-profit. Therefore, your plan must demonstrate that the organization either has a diverse, skilled, independent and well-connected Board or that you have a specific plan for how to develop one. The early recruitment of qualified and active Board members can also provide invaluable feedback on the plan itself.

4. Your non-profit business plan will need customization for each audience:

Foundations and government agencies all have their own specific proposal templates and application forms, requiring you to customize your non-profit’s basic business plan. For-profit funders, on the other hand, will often accept the standard format business plan. This doesn’t mean it isn’t important to create a strong and well-structured non-profit plan to begin with – it just means that you must be prepared to cut, paste, and revise pieces of that plan to meet each funder’s requirements.

Remember to launch your non-profit with the seriousness of a business, while understanding how your plan must differ from that of a business. If you do, your chances of success will improve significantly.

Did you ever hear about the entrepreneur who, upon returning from a quick lunch, finds his angel investor sitting in his office? The angel greets him with the question, “Where have you been?” Upon hearing the answer, the angel responds, “I don’t see how you have time for lunch given the fact that last months sales were 3.5% below budget.”

Don’t laugh, it happens more than you think.

Obviously this isn’t exactly what you were expecting when you took your angel’s money. In addition to your angel’s money, you expected him or her to provide advice, contacts, and support, but not unwarranted sarcasm and criticism.

So how do you ensure that your relationship with your angel meets your expectations and your angel’s expectations in a positive and productive way?

The answer is really quite simple: In addition to the legal agreement that covers the exchange of shares for cash, you need a written or unwritten agreement that carefully and thoughtfully sets forth the terms and conditions of your working relationship. Issues to be covered might include:

• Detailed discussion of the contributions you expect from your angel;
• A very clear understanding of how you intend to run the business;
• Type and frequency of shareholder reports;
• Most appropriate forms of communications; and
• How and when the angel might expect repayments or distributions.

If you and your angel are unable to mutually agree on any of the above points as well as other expectations specific to your business, then do not take their money. Find an angel that you can harmoniously live with. It will be more pleasant, productive, and profitable for all concerned.

If you have some stories about dealing with difficult angels, or if you have some tips to share, please leave a comment below!

This fall, I had the opportunity to participate in the public comment review for the Massachusetts Department of Energy Resources (DOER) new Solar REC program. Over all, the Commonwealth has done a great job trying to keep solar development growing. Programs like Commonwealth Solar provided large rebates to commercial and residential solar projects. In fact, Commonwealth Solar was so successful that funding was in short supply late last year.

So the dilemma that the Commonwealth faced was how to keep solar installations growing and demand strong without it costing real dollars to the Commonwealth and ultimately the taxpayers.

Dwayne Breger and his team at DOER invested countless hours this past fall and early winter reviewing programs previously implemented in other states, and developing a unique program that should help maintain growth over the next decade.

The details of the program are available at MA Solar Credit Clearinghouse.

Briefly the new program does the following:

1. It establishes a specific Renewable Portfolio Standard that generators must fulfill with solar energy. In 2010 the Solar RPS is 25MW.
2. It tries, through various economic mechanisms, to establish a relative constant price for S-RECs. By trying to stabilize REC prices, DOER hopes to provide banks and other lending organizations with a reasonable certain, and therefore, financeable revenue stream that project developers can use to obtain financing.
3. Municipal Light Districts are eligible for the program. This is a big change, because it allows towns like Norwood, Wellesley, Concord, and others …. that were not eligible for RET program because they were not members of the trust …. to generate and sell Solar RECs which will in turn help finance projects in those towns.

All in all, kudos to DOER, for grabbing the bull by the horns and getting what looks an exciting program quickly into the marketplace.