Founder of Actuality Systems, Inc. Gregg Favalora spoke to students eager to use their Harvard diplomas as tickets to millions at a presentation last night sponsored by Harvard Entrepreneurs Club.
At this meeting, Favalora introduced the concept of business plan.
"Business plans help you to understand where your firm is going financially and strategically," said Favalora.
Favalora took a leave of absence from the Harvard Business School a Year and a half ago in order to found Actuality Systems Inc.
His growing startup markets a technological system that operates with Mechanical CAD software packages to create three dimensional models.
Favalora said that in order to start a business like Actuality, entrepreneurs need to successfully solicit capital from investors and venture capitalists through a developed business plan.
An effective business plan includes a detailed market assessment, including market analysis and potential customer data, according to Favalora.
"Most entrepreneurs make the mistake of not talking to customers," Favalora said.
He encouraged attendees to meet with customers in order to ascertain the popularity of a product among potential buyers.
Favalora said that including such information in a business plan is essential to effectively communicate with investors.
He added the business plan should also include information about the firm's employees.
"You want the best of the best," Favalora said.
"A-players," he said, are essential to business teams. "Even if it means your business will grow slowly."
Teams should also include "a mentor who has `made it big," according to a guide distributed to attendees by Favalora.
At a firm. the presence of astute business people with extensive experience will "push up the probability of getting funding," he said.
Also, these people can offer experience and valuable contacts to the company team, according to Favalora.
Once the business plan is pitched, Favalora said that the entrepreneur should suggest future directions for the partnership between entrepreneur and investor.
"Don't be afraid to ask for sales up front," Favalora said. Still, entrepreneurs should be prepared to lose equity, he added.
"People who invest expect a portion of the firm back," said Favalora.