The Ernst & Young Business Plan Guide, Third Edition

Chapter Thirteen. Structure and Capitalization

Keep Your Name!

When Kmart, the second largest retailer in America, went bankrupt, Eddie Lambert, a protégé of Warren Buffett, saw value in the sleepy brand. He saw two assets: real estate and brand awareness. This was so successful that later Kmart bought Sears, another retailer with hidden value.

Often, a company has hidden value in intellectual property. In the haste to get the business going, sometimes this is overlooked. Donald Trump is an example of someone who has developed a world-class brand through the creative use of his name. The dictionaries created in the last few years have updated the definition of the word google. In many circumstances the brand remains more powerful than the initial product or service.

Sometimes a bankrupt company has very little in the way of tangible assets. However, the brand name remains. Two things to keep in mind: Be careful not to give it away with the plan. Make sure you use the proper form for registering your brand or other intellectual property. Also, be sure you did not use anyone else’s property in your plan. You will likely have to attest to the integrity of your work.

In the structure and capitalization section of the business plan, the entrepreneur says to a reviewer: “You’ve reviewed my business plan. If you are interested, here’s what the business requires.”

This is where the entrepreneur identifies what legal form will be selected and how the venture will be capitalized. Typically, this ...