Monday, February 15, 2021

An Introduction to Business Planning Tools
Back in the summer of 2016, I worked with an international law firm that wanted the enter the American legal market, with a specific focus on business planning serving start-up businesses and other corporate clients - a hard way to start from scratch in "Capital of the World." 

This article was the first in a series of blog posts I wrote that explored how small businesses in New York can look to grow through outside investment  

Oh, and before I forget, keep in mind that these kinds of posts are instructive in nature, it is always best to consult an attorney before making any major business decisions. 
Everyone who goes into business thinks that they have the next "big idea".  If only you had the capital to take off.  But how do you get from point A to point B?   And how do you get your hands on that sweet investment capital that you so desperately need 

There are two tools out there that can be used to stir interest and attract investment.   

A business plan is a document that describes the fundamentals of your business idea and provide financial data to show that you will make good money. The content of any given business plan depends on the audience that will read it - potential investors, lenders, or even just for yourself to use as a tool to measure your progress.

A private placement memorandum (PPM) sometimes called an "offering memorandum",  is a  document created by a company and provided to prospective qualified investors to drive interest in purchasing stock in your company. Owners of privately-held corporations use PPMs in “private” transactions for securities not registered under applicable federal or state law for "public" sale on a stock exchange or other market. These sales are exempt from registration, but because of their highly-speculative nature and the high risk involved to investors, the material terms of the offering are disclosed under SEC Regulation D and are only open to qualified investors.  

The PPM outlines the company selling the securities, the terms of the offering, the risks of the investment, and other disclosure, which vary depending on the complexity of the offering.

Business plans and PPMs serve different functions.  A business plan is basically a marketing document created to introduce and promote your company, containing forward-looking information and projections. A PPM is a disclosure document descriptive in nature that allows an investor to decide on the merits of investing in your company. 

The presentation within a business plan outlines market analysis, target customer / audience, potentials for market growth, any potential competition, anticipated streams of revenue, and strategic partnerships. The presentation within a PPM may contain some marketing aspects, but is more factual and concrete in that it must address external and internal risks facing the company that an investor must weigh.  If a business plan is the advertisement, the PPM is the fine print.  
Don't worry if you're confused - that's why God invented lawyers who specialize in business formation and planning! If you want to learn more, feel free to contact me.

Gene Berardelli is a street-smart attorney with with over fifteen years of experience in civil and commercial litigation. Gene has achieved several career achievements, including successfully settling a seven-figure personal injury claim, successfully arguing before the New York State Appellate Division and successfully representing clients in trial litigation, mediations and arbitrations against such recognizable entities as the City of New York, New York City Transit Authority, JPMorgan Chase, TD Wealth Management Services, Inc., The Long Island Railroad, and Macy*s. Gene is also a noted New York Election Law expert who has had his opinions cited in scholarly works and published in news and feature articles.


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