Frequently Asked Questions
- What does Cayenne Consulting do?
- What industries do you specialize in?
- Can you guarantee that our plan will raise capital?
- Can you help us raise money?
- Do you ever invest in your clients?
- Do we really need a business plan?
- Why should we hire a consultant to write our business plan instead of doing it ourselves?
- What makes your business plans so special?
- What makes your financial projections special?
- How does the process work?
- How long does it take?
- Can you work any faster?
- Will you agree with everything I say?
- What happens after you've delivered the final documents?
- How do you price your services?
- Are you worth the money?
- Will you take all or part of your fees in equity, or defer it until after we raise capital?
- Will you sign a non-disclosure agreement?
- Can you send us samples of your work?
- Where are you located, and how do you work with clients outside of your local area?
- What do investors look for in a business plan?
- Under what circumstances does it make sense for us to hire you?
- Are your materials all that we need in order to start looking for capital?
- What are your qualifications?
- Do you have references?
- How long will it take us to raise capital?
- Is our company at the right stage to be looking for capital?
- Is venture capital right for us?
- What does Cayenne Consulting do?
We prepare business plans, financial forecasts, and investor presentations for companies seeking venture capital or a significant amount of angel capital. We also provide several related services, such as market research, website development, marketing, and business development consulting. Finally, we have a significant network of attorneys, accountants, and other professionals we can refer you to for specific services.
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- What industries do you specialize in?
We take pride in our ability to learn the fundamentals of virtually any industry or technology quickly. Some of the markets we have served include medical devices, biotechnology, Internet/e-commerce, telecommunications, distance education/e-learning, real estate, financial services, healthcare services, manufacturing, retail, food service, consumer products, media and entertainment, aerospace, artificial intelligence, enterprise software, insurance, energy, and networking. Having said that, we believe that the value we bring to the table is not industry expertise - which you already possess in abundance - but rather an understanding of what investors like to see in a potential opportunity.
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- Can you guarantee that our plan will raise capital?
Nobody can make that guarantee (and if somebody ever makes that guarantee, it's a good idea to run away quickly). A good plan is essential, but a plan alone will not get funded. Although we will do our best to help you prepare, we have no control over how well you present yourselves to investors, or how well you answer their questions. We can coach and we can mentor, but at the end of the day, it is still your business, and you must close the deal.
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- Can you help us raise money?
We can sometimes make strategic introductions to potential investors or other intermediaries. In general, however, only registered broker-dealers (investment banks) can legally accept compensation for raising private equity (see our blog entry on Beware of Finders). Thus, we rarely become actively involved in the capital-raising process. We advise you to seek legal counsel before dealing with service providers who offer to raise capital on your behalf.
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- Do you ever invest in your clients?
Not at this time.
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- Do we really need a business plan?
If you run a business, then it's probably safe to say yes. In fact, you may require more than one business plan: one for raising capital and one for running your business. The former is a compact, easily digested strategic document that is designed to persuade potential investors to pick up the phone and invite you to their offices for an initial meeting. The latter is a more detailed document serving as a day-to-day roadmap, detailing the tactics supporting your overall strategy. The former needs to be an attractive document that sells; the latter can be a collection of spreadsheets, lists, research summaries, and other documents stuffed in a binder that you refer to and update on a regular basis. We specialize in preparing the capital-raising business plan, but many of the by-products are suitable for use in the operating business plan.
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- Why should we hire a consultant to write our business plan instead of doing it ourselves?
You could easily spend 500 hours or more preparing an investor-grade business plan, financial forecast, and investor presentation, even if you have an MBA. This is time you should probably be spending building your team, product, distribution channels, and customer base. In addition to our expertise in preparing these materials, we offer independent, third-party insights into your business, and may raise questions that you might not have thought to ask.
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- What makes your business plans so special?
Most importantly, they work. In a world in which fewer than 1 in 250 business plans ever raise venture capital, we are happy to report that about half of our plans have raised capital, and a good portion of the rest resulted in an acquisition or currently have commitments for investment from prior round investors. Each plan is hand crafted to reflect the client's specific circumstances, yet share attributes that investors find appealing.
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- What makes your financial projections special?
Balance sheets that balance. Cash flows, income statements, and balance sheets that tie together (you'd be surprised by how many consultants who don't get the basics right). Fully assumption-driven, so that you can do what-if analyses. A fully integrated scenario analysis so you can identify the most important drivers of your business. The ability to create multiple funding scenarios. Benchmarking vs. publicly traded companies (so you can do a reality check). Complete flexibility, so that it can be adapted to almost any business model. Battle tested and venture capitalist approved.
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- How does the process work?
Every situation is unique. However, some fairly common steps include the following:
- Initial discussion to understand your basic needs.
- Review your existing materials (draft business plans, financials, market research, competitor research, etc.).
- Follow-up discussion to clarify details and agree upon the scope and fees for the project.
- Several in-depth discussions to better understand the details, develop strategies, and agree on all major elements of the business plan and financial model.
- Conduct additional research, as needed.
- Draft an Investor Presentation and review it with you to ensure that all parties agree on the high-level vision.
- Draft the Executive Summary and review it with you to ensure that we all agree on the next level of detail.
- Prepare a draft outline of the business plan for your review.
- Begin filling in the details on the draft. Obtain and incorporate your feedback.
- Incorporate your revenue and expense models into the financial model, and explain how it works so that you can take “ownership” of the financials.
- Finalize all deliverables.
- Coach you on the best way to deliver the investor presentation and on how to address questions.
- Provide ongoing support, including making minor updates to the deliverables at no additional charge.
Depending on how we structure the project, you should expect to spend anywhere from 10-30 hours on the process over the course of a typical engagement.
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- How long does it take?
For a typical engagement, consisting of a business plan, financial forecast, and investor presentation, the typical time to completion is 6-8 weeks, as illustrated below. The actual time can be influenced by the quality of your existing materials, the level of your participation, the complexity of your market and business model, and our current workload.
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- We need a plan right away. Can you work any faster?
Yes, for a "rush" fee - generally a 50% premium. We typically work on multiple projects at any point in time, and rush projects can strain our schedules.
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- Will you agree with everything I say?
Only if you're always right. One of our jobs is to help you avoid mistakes. We'll challenge your ideas and assumptions so that you'll be ready for the tough questions when you meet with investors.
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- What happens after you've delivered the final documents?
We remain available, at no extra charge, to answer follow-up questions, provide advice, and to make minor changes to the documents we produced for you.
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- How do you price your services?
In general, we work for a pre-determined fixed fee. The fees are determined by:
- The scope of the project.
- The quality of your existing materials, including early drafts of business plans, financial forecasts, market research, competitive research, etc. For instance, if you have a recent, comprehensive research report from a major market research firm like Forrester, our effort can be significantly reduced.
- The clarity of your vision for your business model, marketing and distribution strategy, financial plans, etc.
- Your availability and willingness to contribute to the preparation of the business plan, financial model, and investor presentation.
- The complexity of your industry and business model.
- The availability of industry information.
- The desired timing relative to our workload. In general, "rush" jobs will carry a substantial premium over projects that can be completed as our schedule permits.
Because of these factors, the fees for a typical project, consisting of the preparation of an investor-grade business plan, financial forecast, and investor presentation, can range from under $10,000 to well over $30,000.
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- Are you worth the money?
We believe we are, because:
- We Succeed: We are well aware that there are many business plan consultants offering their services for under $5,000. Some of these consultants do fine work, but their typical client is the small business seeking SBA and bank loans, not venture capital. Consider that, even during the height of the market, fewer than 1 in 100 business plans that made it into the hands of a VC ever raised capital (and the number is probably worse than 1 in 250 today). Who do you think prepared many of those unsuccessful plans? On the other hand, over half of our plans have raised capital.
- Your Time is Too Valuable: Let's consider a typical $20,000 engagement, consisting of a plan, financials, and a presentation. In our experience, it would take most entrepreneurs a minimum of 500 hours to create comparable materials. If you choose to do it yourself, you are implicitly valuing your time at $40 per hour. Surely, you can create more value per hour for your venture by focusing on your product, customers, and distribution channels.
- Professionalism Adds Value: We can complete a typical $20,000 engagement in about 150-200 hours. This implies a rate of $100 to $133 per hour. You're probably paying your accountant at least $200 per hour, your attorney at least $300 per hour, and your big-name management consultant at least $450 per hour. Yet these are all essentially commodities. We believe that our experience and specialized skills are a bargain compared to the many other professional services you employ.
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- Will you take all or part of your fees in equity, or defer it until after we raise capital?
Only under extraordinary circumstances.
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- Will you sign a non-disclosure agreement?
Gladly. We prefer to use a mutual nondisclosure agreement so that our own trade secrets can be protected as well.
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- Can you send us samples of your work?
Perhaps, in extraordinary cases, after a mutual nondisclosure agreement has been signed. Even though our sample materials have been heavily disguised, we still consider them to be extremely confidential. We prefer that you learn about the quality of our services by speaking with our past clients.
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- Where are you located, and how do you work with clients outside of your local area?
We are headquartered in Phoenix, Arizona, and have consultants in Massachusetts, California, New York, Florida, Washington DC, and other locations. We rely heavily on the phone, e-mail, and fax, and have never met half of our clients. If desired, we are available to visit you at your offices for a day or two at a time.
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- What do investors look for in a business plan?
Our views are summarized in our white paper, Why Business Plans Don't Get Funded.
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- Under what circumstances does it make sense for us to hire you?
Most of our clients are looking to raise $5 million to $20 million of Series B or Series C funding. Some are looking to raise more; others are seeking angel financing of as little as $1 million. Our clients should have a realistic view about what types of businesses have a real chance of raising venture capital, and should have enough fuel in the tank to be able to go 6 months to a year before raising their next round of capital.
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- Are your materials all that we need in order to start looking for capital?
Not necessarily. Your attorney should be able to supply supplemental materials to ensure that your offering complies with state and federal securities regulations. You will also need to assemble all of the documents that investors typically review during the due diligence process, such as corporate by-laws, employment agreements, employee stock option plan, joint venture agreements, customer and supplier agreements, patent applications, etc.
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- What are your qualifications?
We're all experienced entrepreneurs. Many have MBAs from top schools like Harvard or Stanford, and some have PhDs in scientific areas. Most importantly, we have proven track records. Brief biographies of our consultants can be found here.
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- Do you have references?
Certainly. We would be pleased to introduce you to our past clients.
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- How long will it take us to raise capital?
If you have everything investors are looking for, perhaps 6-12 months.
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- Is our company at the right stage to be looking for capital?
We would be happy to perform an evaluation for you, free of charge. Please contact us.
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- Is venture capital right for us?
We would be happy to perform an evaluation for you, free of charge. Please contact us.
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