My first article for this Deseret Morning News column dealt with integrated financial projections. The next step after completing that significant and important first step is to plan out the capitalization of the startup company.

In order to do this the entrepreneur needs to know what the capitalization table is. Also known informally as the cap table, this important document is typically a snapshot financial statement buried among the many financial statements companies issue. It lists the owners, usually by share or percentage ownership, at a certain point in time. It also often includes the current value of such ownership, and less often the acquisition price of the corresponding ownership. Ownership is often called equity. I use those terms interchangeably.

Surprisingly, top business schools do not train their accounting, finance and entrepreneur students on cap tables. I have yet to find a graduate who can articulate the cap table to me from classroom instruction. I think this is odd, because when I take the time it takes to adequately instruct an individual on cap tables, it is often one of the most eye-opening and thrilling business experiences for them. I know it was thrilling for me when someone finally taught it to me. Unfortunately, this didn't happen until long after my collegiate career was over - and long after I truly needed the knowledge in the marketplace.

Just as the entrepreneur may analyze "what if" scenarios using an integrated financial projections workbook (balance sheet, income statement and cash flow), he or she may also convert the cap table into a multiple investment and capitalization projection tool.

Before the reader gets lost in a sea of words, please allow me to establish some additional foundation. Companies that are not boot-strapped (entrepreneur and customers pay the way) and require outside investment usually go through multiple rounds of investment. These rounds are often called, in chronological order, the founders' round, the seed round, the angel round, the venture capital round, the mezzanine round, etc.

Instead of just having a cap table express one instant in time, the cap table can be set up (using a spreadsheet tool like Excel is best) so that it shows in columnar format the owners/investors and the various rounds of investment and how that affects ownership percentages, share price and company valuation.

The most important thing is that the entrepreneur may play "what-if" scenarios with the multiple rounds and create a plan for raising capital in an optimal fashion. Even if reality does not pan out the way it is projected, the entrepreneur has a tool to anticipate what is going to happen.

An interesting by-product of this new tool - the cap table projection - is that it is often the first time an entrepreneur grasps two important concepts: (1) how founders and investors become so fabulously wealthy from business ownership when things go well, and (2) the awful price via dilution of ownership that happens when founders sell shares of their company to investors. This is often a thrilling and bone-chilling revelatory moment for the entrepreneur.

Sadly, few entrepreneurs take these important first steps, and they miss that extraordinary moment. Not coincidentally, the result of their entrepreneurial effort is, more often than not, failure. As trite as it sounds, a failure to plan in this important way is indeed a plan to fail.