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What's the Best Way to Write a Business Plan?
ohyeahohare asks: "I've got an idea that I want to start up in Australia. The business store front will be a .NET web application, however any business requires money to start up and I'm looking for some Venture Capitalists to help fund mine. As the saying goes, 'Businesses that fail to plan, plan to fail.' I need some advice on how to write up a killer business plan, everyone involved knows exactly where the business is heading. Does Slashdot have suggestions or recommendations from personal experience to offer?"
1. Ask Slashdot 2. ??? 3. Profit!
What's the Best Way to Write a Business Plan?
...so you can erase your mistakes!
With a pencil...
The government which is strong enough to protect you from everything is strong enough to take everything from you.
If you have any equity on your house, use that first.
If you have rich relatives, use them first.
If you can get a bank loan, use that first.
If you can sell a kidney, do that first.
Unless you need big bucks to start your company, you should avoid VC firms. They'll want too much control, and too much money. Hell, I bet VISA and Mastercard have better interest rates.
Religion for nerds. Stuff that really matters
I recently started a business and a partnership. I googled for business plans and you can get samples for the SBA (Small Business Administration - US) probably au as well.
7 56474-8088941?v=glance&n=283155
However after the rubber hit the road the document meant very little. That may not be the case for you since you will be looking for funding but until you have done it - it is difficult to know what you are doing.
I would suggest before you take on money and perhaps before you start your business that you read "The Partnership Charter".
http://www.amazon.com/gp/product/0738208981/102-9
It raises some good questions whether your partner is your brother (my case) or a vc company (your case).
Good Luck
You should be asking SCORE, not slashdot. See: http://www.score.org/
SCORE's 1,200 email counselors are ready to assist you.
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There literally hundreds if not thousands of books on how to write a business plan.
Given my short attention span, I found "Business Plan in a Day" by Rhonda Abrams a great start. While I don't 100% agree with its format, I found it got my mind thinking in the right direction. It also allowed me to select other books based on their suggestions and formats.
issues like .NET vs PHP vs Servlets, etc should be way in the back. it's an implementation issue. Your plan should concentrate much more on marketing and finance, unless you're doing something very unique.
Here's a start. You don't need slashdot's help!
Religion for nerds. Stuff that really matters
S.M.A.R.T.
Specific: explain exactly what you want to develope and how you will do it
Measurable: set measurable goals including revenue and profit
Atainable: this should be fairly straight forward
Realistic: similar to above
Time frame: be realistic but push yourself
Don't take business advice from amateurs, you have a lot to lose.
A: Don't ask Slashdot.
Unless you really need a lot of capital to start out with (and probably even then) avoid VCs like the plague. They will f*ck you and not even say thanks. Seriously, their job is to let someone else take all the risks, then jump in and make a metric buttload of money off of an idea that has already been proven. They are very seldom risk-takers, and they are generally ruthless. There are somne exceptions, but if you must find a VC, do your homework first. Talk to entrepreneurs who have worked with VCs. Get first-hand info from people who've been through a VC experience and survived to tell the tale.
When writing a business plan, cut through the crap. Read Guy Kawasaki's stuff. He knows what he's talking about. His piece on business plans is brief and to the point, which is how your business plan should be.
Good luck to you!
Read the EFF's Fair Use FAQ
1. Ask slashdot for business plan. ....?
2.
3. PROFIT!
Moderator hint: a comment is neither "Flamebait" nor "Troll" if it is true.
You want to read this. Seriously, it's good. It also includes a chapter with helpful information to keep in mind when writing a business plan, specifically for writers that come from a technical background.
For anything. They demand control into your business, especially when you get loans from them. Avoid them like the plague. inc.com is a good place to start
1. Executive Summary (your elevator pitch, no more than 3 paragraphs)
2. Investor Relations (What you want from other people)
3. Description of Business (about 1 page)
4. Sustainable Competitve Advantage (The only thing anyone will read other than the executive summary)
5. Description of Competition (a full page is about right)
6. A list of competitors with a the strengths and weaknesses of each in about a paragraph per.
7. A timeline for what you want to do and when
8. SWOT chart (strengths, weaknesses, opportunities, threats)
9. Financials (make up some numbers and use them to make excel graphs)
The thing that gets most people is the financials. Obviously there is no way to know so you just have to make something up that seems reasonable. This isn't cheating or being unethical, it's the only way to do it and it is expected of you. Some people feel bad about this anyway. Don't.
Also, here is my Squidoo Lens on the subject if it helps. It is mostly just a recommended reading list. That being said, there really are fifteen or twenty Do Not Pass Go, Do Not Collect 200 dollar books. Everyone agrees on this, but of course they will all give you a slightly different list of what these books are.
That being said, you won't get any money from a VC until you have partners and a board of directors. The first step is to go around and talk to as many people as are willing to listen. Once you have told fifty or so people your idea and gotten all the feedback you can handle (mostly people telling you how stupid you are), then circle back and ask those people to advise you, be on your board, or invest. Most of them will offer without you having to ask if you are talking to the right people, i.e. people who have experience as serial entrepreneurs. Also before you can get VC funding you will probably need to show traction. The correct order of doing things is 1) Sell the product 2) Design the product 3) build the product. It's counterintuitive, but so is the idea of dropping out of college to make more money. :-)
Read The Art of the Start by Guy Kawasaki. It's a really good book about starting up a company from writing a business plan to recruiting to raising capital. I just read it because I'm in the process of starting up my own company. It's a great guide and a good read.
Assuming that you have no experience in business at all, one possible place you could try is colleges in your area. In the US, many colleges offer help to people interested in starting businesses. The seniors (in college, not senior citizens) will help you develop a business plan and anything else you may need. They often do this as an internship. Most of the time it's free or if there is a fee, it's small. Anyway, if you don't have a great deal of money to start out with, this is a good place to start.
I'm in the middle of doing this myself. I found a package from Jian Software which I found great and definitely recommend. It is a comprehensive set of word (open office works fine) and excel templates fronted with a bit of software. It comes with a video, an e-book, and lot's of explanations about the process. Check it out and see for yourself.
Software Developer - www.coolbalance.com
Once you have used up all available equity of your own, the next step is to bring in Angel Investors. After that comes the Venture Capitalists.
Your top resource should be the Business Plans Handbook. Those are real business plans that got their authors financing for their businesses.
She wrote a pamphlet called "Business Plan Bootcamp".
Check out her information.
http://strategic-capital.com/
People have done it and have been funded.
It sounded to me like the how to be a rock band book, but that worked too.
http://www.dack.com/web/bullshit.html
You say you want to write a .NET web app. Sounds like a solution looking for a problem, which means you're really on shaky ground, IMO. You certainly don't sound like you really noticed a niche that hasn't been scratched and are now looking for a technological solution. Do the people involved really know what direction they are going, or are they suffering from start-up fever? (E.G.: Yeah!!! We gonna go to the Superbowl!!! ...year passes... Uh, yes, ma'am, I just sign here for my unemployment benefits?)
The VCs will be so shocked to meet somebody with a vestige of ethics that you'll be able to rob them blind before they recover.
Seriously, writing a business plan for VCs is the least of your problems (the largest of your problems being the VCs themselves).
Business Plan:
:)
1. Start an dot com business with a buzzword technology.
2. ???
3. PROFIT!
DYWYPI?
MISSION: At [name of company] it is our conviction that [to do the stuff we want to do] and to increase shareholder value are not merely complementary activities--they are inextricably linked.
PURPOSE: To increase shareholder value by [doing stuff]
EXTREMELY SERIOUS WARNING (printed on a separate page, in red letters on a yellow background): Unless you are as smart as Johann Karl Friedrich Gauss, savvy as a half-blind Calcutta bootblack, tough as General William Tecumseh Sherman, rich as the Queen of England, emotionally resilient as a Red Sox fan, and as generally able to take care of yourself as the average nuclear missile submarine commander, you should never have been allowed near this document. Please dispose of it as you would any piece of high-level radioactive waste and then arrange with a qualified surgeon to amputate your arms at the elbows and gouge your eyes from their sockets. This warning is necessary because once, a hundred years ago, a little old lady in Kentucky put a hundred dollars into a dry goods company which went belly-up and only returned her ninety-nine dollars. Ever since then the government has been on our asses. If you ignore this warning, read on at your peril-- you are dead certain to lose everything you've got and live out your final decades beating back waves of termites in a Mississippi Delta leper colony. Still reading? Great. Now that we've scared off the lightweights, let's get down to business.
EXECUTIVE SUMMARY: We will raise [some money], then [do some stuff] and increase shareholder value. Want details? Read on.
INTRODUCTION: [This trend], which everyone knows about, and [that trend], which is so incredibly arcane that you probably didn't know about it until just now, and [this other trend over here] which might seem, at first blush, to be completely unrelated, when all taken together, lead us to the (proprietary, secret, heavily patented, trademarked, and NDAed) insight that we could increase shareholder value by [doing stuff]. We will need $ [a large number] and after [not too long] we will be able to realize an increase in value to $ [an even larger number], unless [hell freezes over in midsummer].
DETAILS: Phase 1: After taking vows of celibacy and abstinence and forgoing all
of our material possessions for homespun robes, we (viz, appended resumes) will move into a modest complex of scavenged refrigerator boxes in the central Gobi Desert, where real estate is so cheap that we are actually being paid to occupy it, thereby enhancing shareholder value even before we have actually done anything. On a daily ration consisting of a handful of uncooked rice and a ladleful of water, we will [begin to do stuff]. Phase 2, 3, 4, . . . , n-1: We will [do more stuff, steadily enhancing shareholder value in the process] unless [the earth is struck by an asteroid a thousand miles in diameter, in which case certain assumptions will have to be readjusted; refer to Spreadsheets 397-413]. Phase n: before the ink on our Nobel Prize certificates is dry, we will confiscate the property of our competitors, including anyone foolish enough to have invested in their pathetic companies. We will sell all of these people into slavery. All proceeds will be redistributed among our shareholders, who will hardly notice, since Spreadsheet 265 demonstrates that, by this time, the company will be larger than the British Empire at its zenith.
SPREADSHEETS: [Pages and pages of numbers in tiny print, conveniently summarized by graphs that all seem to be exponential curves screaming heavenward, albeit with enough pseudo-random noise in them to lend plausibility].
RESUMES: Just recall the opening reel of The Magnificent Seven and you won't have to bother with this part; you should crawl to us on hands and knees and beg us for the privilege of paying our salaries.
Not sure this is exactly what you're looking for, but the one thing I have heard pretty universally from successful entrepreneurs is that something will always throw off your plan. Maybe this isn't necessarily something you should put into a formal business plan, but you should have some idea about how you'll adjust when your assumptions don't pan out.
On a related note, you should ask yourself whether you're in it for just that one idea that you have or if you want to run a business and this idea is just something to get you going. If you're too tightly married to that one idea you might fail to adjust to realities in time. Agility is the new stability!
I'm in South Australia and have found the Business SA http://www.business-sa.com/ site quite useful. They also have a Young Entrepreneur Scheme http://www.business-sa.com/Content.aspx?p=32. I'm not sure what other states offer but it would be worth your while checking it out.
Good luck and hope you can make it work.
Unexpect the expected!
The Definitive Business Plan ( Richard Stutely )
That link has its "previous-history" tracking information ripped-out, BTW
The amazon.com "registry" link of this post has other books of similar excellence listed, as well as why I'm recommending 'em ( no address is attached to it, so no-one can buy 'em for me via the thing, it's posted there for everyone's information ),
but the book you NEED is Richard Stutely's.
I'd also recommend "Thinking Visually" and "The Power of the 2x2 Matrix", but immediate-need means I'm posting this now, not after working-over additions for hours. Cheerses, eh?
IPTables enhancement Fail2Ban bans cracker-login's
And instead of that plan being "Ask Slashdot" I'd try "Ask Google". If you don't get anything useable on the first page of search results then try searching on something ingenius like "business plan". ;-)
I've used Business Plan Pro. I was bugged at first that it really just seemed to be all open ended questions with big text blocks to fill in the answers to questions, but it was at least good at asking some tough questions that scared me out of my business idea.
I figured the most important part of starting a business is having way more money available than you need. Everyone has their optimal ideas of how money will flow in for great ideas, but you need to be able for that not to happen for longer than you expect and cover your cost overruns along the way, because there's always going to be unexpected expenses.
...the state government offers training and assistance; particularly to IT firms in this area. If you are in this state, try chasing down the appropriate contacts at the Department of Trade and Economic Development.
Several of my colleagues have had their assistance in getting business plans to run down v.c.'s and such...
I run a fairly successful company.
.Net, find a partner with Microsoft who has a good solution and sell that. The profits you'll make from these sales and customizing these products will eventually fund your own niche product. Some products are more profitable than others - I have a 40% margin on some stuff I sell.
.Net through Microsoft Partner channel - there are quite a few.
It has a specific and complicated business plan, and some of it is written down. You can easily write a business plan once you actively start working on stuff and have some prospects or customers.
VCs are not faceless creatures. Sooner or later you'll actually get to know some as your personal network grows. I probably could get some financing right now if I really wanted to. I'd say VC hunting is like job hunting - tedious and time-consuming, unless you have the inside track where some lunches can turn up to be quite profitable.
If you want to run a company, you need to figure out what exactly your product will do and who needs it. I know that it seems like everyone needs it, but that's not the case.
With regards to storefronts, you may be better off selling someone else's established product as a channel partner. What do you bring that no other storefront product has done so far? Shopping carts were new in 1997. I worked for a company that developed one of these first successful shopping carts. That means that you are catching up on NINE YEARS of development.
Now, if you want to do
If you can't describe at least one relevant aspect what you are doing in less than 30 seconds, you need more focus.
I find formal business plans to be a nuisance, but it may help you clarify your vision. As long as my key assumptions are on the paper, that's good. My vision is very simple and seemingly unattainable, yet I am exactly at the point I wanted to achieve by this stage now.
I just ran a search for storefronts written in
Leonid S. Knyshov
Find me on Quora
Your company will find stuff people will pay a lot for. Do something to get some of that money. Work hard. Work effectively. Spend wisely. Not be sued. Not compete (as in don't do what others are doing). You'll stop spending all day on slashdot. And you'll forget all you learned about right and wrong, and accept that moral_value=personal_benefit-risk*personal_consequ ence, as the market intended (though replace "personal" with "shareholder" when explaining to the investors).
Disclaimer: I may be full of **it.
I wrote my first business plan without ever looking for guidance on how to write a business plan. In hindsight, my plan turned out to be highly accurate. You basically need to think about your strategy, and write down whatever is relevant in complete sentences. Ask someone else to punch holes in it, and then go about collecting the missing information and performing the revisions. The only reason to read sample b-plans is to get the terminology for the headings. Samples and templates are not going to help you do the critical thinking that is required. On the other hand, doing as much reading as possible in your field helps a lot.
From the brief description about the business the idea doesn't sound too radical for a VC(who typically stay away from risky early stage investments), and neither does it sound as something that requires VC money(typically in millions, not thousands). So I wonder why you need VC money?
As other commenters have already pointed out, first get your own skin in the game by investing your own money. Remember the golden order of early stage funding, founder->family->friends->fools. Only after you've exhausted these should you start looking at venture capital. VC money typically helps you scale up/expand rather than bootstrap.
Of course exceptions will always be there...but those are typically when you've got either a great idea(eg. Riya) or a great startup team or both. Simple ideas with unknown management teams don't even register in the eyes of VCs.
sign this guy up for the B-Ark
You say "any business needs money" like it's a "people need air to breathe"-type fact.
.NET with FOSS); hosting services are nearly free. What isn't free is your own time, and that's the tradeoff you make.
I'm in the process of starting my 3rd Australian business now and none of them have required any significant money. Computers are close to free these days, or free if you can use a 3yo one that someone's throwing out; FOSS is free (and, yes, you can develop in
Some suggestions:
- live off your savings. If you don't have any, then get some. If you can't save any money, then you won't be in business long anyway so you may as well get a job
- spend as little money as you possibly can. Really. If you need particular expertise, scour your personal network to see who's got that expertise; once you find someone, offer your skills in exchange for theirs. Work from your own house, and live on coffee and sandwiches if you have to. If you eventually have to go to a VC for money, they'll want/expect to see that you're tight with your money before they give you some of theirs
- call in favours from friends and family. Visit your parents at mealtimes, if you have to. Track down that teenage cousin who wants to build Web sites for a living, and have him build yours; if you can't pay him, tell him he can put it in his portfolio and you'll refer people to him later. Pick the brains of people you know who've run their own businesses; in particular, find those who've *failed* because they'll probably have insights into how they went wrong, and you can learn from their mistakes
- when opportunity permits, seed the idea of what your business is with people who have money, but *don't ask for their money* and *don't* give them enough info so they could get someone else to build it for them. Go to networking seminars, if you don't know these sort of people and want to track them down. Show them your business plan, but don't go with your hand held out for cash. At some point, you may want to sell your business to these people, but you want them to be coming to you begging to buy, not you going to them begging for cash
I had a class with Bob Hisrich, one of the leading professors in the field of Entrepreneurship and New Venture Creation. Any of his textbooks are a good start.
He said once in a not-entirely-joking way that "every business plan must have at least ONE chart with a line going up and left". It sounds silly, but there's some merit to the psychological impact a nice graphic can have.
There are of course plenty of other more useful tips that others have already offered - I just found this amusing.
Shades of Grayden
1. Borrow a shitload of money
/. is not the best place for this question...
2. ???
3. Profit!
Well, maybe
But stay away from the orange shades as they may make you appear less professional.
You need to study books about business management and stay plugged with the market to known where the ideas are going to start or die. It's the hard and the best way to make your own business without help.
http://www.michel.eti.br
If you haven't had a chance to watch it, (amonst other things) it discusses how to get mega VC bucks using a sketchy business plan and a lot of creative truths.
Fill in that ????? bit between $thing and Profit!. :P
/., not Harvard Business College or whatever.
Seriously, this is
I second that. An excellent book, written from a practical perspective. Helps you to build a plan who's usefullness actually extends beyond the initial funding of the business to ensure that you don't piss it all up against the wall!
Some advice from someone who's done this.. two or three times now.
Get your prototype or demo working (well). That's phase 1.
Write up a ~5-10 page document that explains;
- Who you are;
- What you've done before;
- What you want to do;
- How you plan to do what you want to do;
- How you plan to make money and..
- how much money you can make;
To see if the idea is even worth pursuing. Once you've convinced yourself of that, go talk to some local investors. You're not going to get the attention of a VC unless you have connections, and if you had those connections, you wouldn't be asking on slashdot.
If you can't convince the local investment community to risk a few bucks, then your idea is probably not as good as you think it is. Most communities of any size have some (usually wealthy) people who will risk some money on local firms. You need to network with those people and see what they think. Once you get that far, THEN you need to think about a business plan. Until you get to that point, that basic document I described above is all you need.
Good luck!
..don't panic
Interesting comment. I wasn't aware of any other South Australian based business owners / entrepreneurs who lurked on /.. Contact me via my company's site (in the comment or above) if you want to touch base, swap notes, see what we can do for each other.
InfoSec that matters, when it counts.
Skip the MS-dot NET part unless you have money to burn and can tolerate poor performance and lots of down time. There are lots and lots of existing storefront software already set to go, even the PHP stuff is polished now.
The best way to write a business plan is to sit down and start writing. Work out what you want to do, how you want to do it, and why. Write that down. Then throw it out and start again. Even though I followed a basic template, it still took four goes before I had a business plan that was suitable to put in front of people with big buckets of money. You might find that there are no VC firms in Australia who will be interested in funding you, but if you want to try, look at the member list for AVCAL
Other important factors include where you are setting up. If you are not on the East Coast, then forget about funding. The Australian VC market is extremely risk averse, as they are reinvesting superannuation funds more often than not.
Brush up on your interpersonal selling skills. If you don't have any, you won't get any money, and you won't get any interest. You will also find that the business administration and building efforts will tend to push any coding efforts out of the way from time to time (some analysts suggest 80% of your time might be on business tasks, not coding / developing).
Ensure that you have the appropriate legal and tax setups in place, and that you have a solid plan on how to protect any Intellectual Property that you have developed. No, Australia does not have software patents, but you can patent software if you follow very specific guidelines. Be aware of what the FTA means to you, as well.
Other people who have been through the process before tend to recommend against seeking VC funding for software companies, but I have also seen some fairly stupid VC funding decisions made, so be prepared to take and make risks.
If you haven't already, seek out your regional / state NUG (.Net Users Group), they should be able to put you in reach of people who can help you out.
Finally, good luck!
InfoSec that matters, when it counts.
Right now I am starting a buzzword .com biz, and are currently writing down the plan, evalutating it, drawing database schemes, programming test-versions etc.
Earlier I wrote version 0.1 of the site and thrown it away, and are starting version 0.2 now because I noticed some stupid mistakes in my own design and planning.
My guess it is going to take several months before version 1.0 is launched and I will throw away much code and schemes in that time.
Here's one more tip
What I've learned in all this years is to write small applications if it is intended for the intarweb.
Do not create one big bloated thingie that handles 120 different functions. Not only the code gets unreadable, if there is a fatal error in 1 function, it wil crash the remaining 119 functions...
HTH
Having just this very day finally resigned from the startup some friends and I founded about 5 years ago (in Australia) when our previous employers fell victim to the burst dot.com bubble, some of my experiences may be relevant:
- There's some good advice in eariler posts on composing the business plan itself, but don't get too attached to it. Depending on your investors, partners, and clients, it will change. Once you get the VCs involved, they will write the business plans.
- Don't get the VCs in until you absolutely have to. They will screw you for everything they can get, eventually. That's just what they do, even the relatively benign ones.
- Don't give up your day job unless you can take a really hard, pessimistic look in the mirror and be confident that you can raise enough seed capital from family, friends, etc., to do at least a convincing proof of concept. It will put you in a much better position when you do have to talk to VCs.
- Australian VCs and seed-funders are almost absurdly conservative. Many talk big about supporting local innovation, but the reality is very different in my experience if you need more than about $100k to get your idea off the ground. Expect to fight over every last cent - you won't be fitting the office out with Aeron chairs.
- For this reason, when you do get VCs in, get them in big the first time. You do not want to be in the position of needing another 6 months funds to get your product ready when you've already given the VCs a big chunk of the company. Once you lose your majority share holding (and they have more directors on the board than you do), you're completely in their power.
As a postscript, the reason I'm leaving my startup is that it is, at last, in a position where it can almost afford to hire someone to replace me. I'm taking an entry level position at one of our clients that is almost exactly double my salary at the startup.
Finally, good luck!
You know they call 'em fingers but I've never seen 'em fing. Oh, there they go.
The point of a business is to so that it shows that you thought of how to start, operate and exit the business - NOT how to operate the business. When you start, you'll find that things WILL change and you have to make adjustments. So, when an investor sees the B-plan, they'll know that you investigated the business thouroughly (or not) and that you are the expert.
Which leads me to another thing: DON'T BE (TOO) PARANOID ABOUT INVESTORS STEALING YOUR IDEA. Nothing will stop the works faster than demanding a NDA. For one thing, the investors are into investing, they don't want to be bothered with starting a biz. Prefessionals, like accoutnants, lawyers, etc... are doing their thing and they don't want to implement you idea and blabbing your idea all over will hurt them more than you - they don't want to have the reputation of blabbing people's ideas all over the place. Also, this is hard to take, I know, your idea is probably NOT that unique. Serendipity has its affect. Someone else has had your idea but just didn't have your guts to implemnt it. I know an entrepreneur who says that he can publish any of his ideas on the web for all to see and it wouldn't matter because it's the implemntation that's key. And he's a master.
That's right, I also said exit plan. An exit plan is necessary, because, one day, you WILL be leaving that business (death, retirement, or the most likely selling). The VCs will want to get out of your business after about 3 to 5 years. They have to in order to get the ROI that they demand.
Also, if you have MS Office, there's plenty of FREE startup templates on their site. here I don't know if Open Office and other FOSS can use those.
Oh! I almost forgot, the book, "The Portable MBA in ENTREPRENEURSHIP" , Bygrave and Zacharakis is an excellent resource!
Good luck!! Maybe one day when I'm "Down Under" I'll see a huge office complex with your name on it!
If this looks like a contradiction, it isn't. It's the difference between thinking about operations and what's needed to actually operating it. In other words, everyone will know that you're not going to operate the business EXACTLY or even close for that matter as you described in the business plan. It just shows that you have a really good idea how to do it and you thought of the in and outs.
I can recommend one book: The New Venture Adventure written by Ueli Loosli (ISBN: 1587990032)
One other thing I want to tell you: Your first round of financing should always be the FFF round. (Friends, Family, Fools). If your relatives don't believe in you and give you money why should a VC?
Another thing you should ask yourself. What do you need more a VC or a Business Angel? Both have their advantages and disadvantages. Depending on how your company is going to look like a BA could be the better option.
"every business plan must have at least ONE chart with a line going up and left".
;-)
You're right, it does sound silly. Probably because a line going up and left would essentially mean dropping sales/profits/market share.
Yeah, that kind of graphic would not have too great a psychological impact with VCs
The best advice, by far, is: Read other business plans! Of course you should mainly read those that got the company finances ;) After you read a few, you start to see your own format emerge :-)
Good luck!
Any technology distinguishable from magic, is insufficiently advanced.
Page 2 - Table of Contents
Page 3 - Executive Summary - Should be no more than 1 page - explaining you, you plan/idea/business model/revenue stream, succinctly and professionally
Page 4 - Purpose of the Business Plan - to organise your ideas, to demsontrate that you are capable of pulling this off, and making it profitable, and repaying your loans, to obtain start up capital, through traditional or private lenders
Page 5 - Products / Services
Page 6 - Operation - your hours of operation, your specific business model, your factories/employees/hiring/policies/procedures in short forms, your revenue stream, how are you going to make money at this, and pay me back, and is there really that much profit to be made?
Page 7 - Ownership - your one page bio, your experience/training qualifications to run this, your partners(same again) convince me to part with my money
Page 8 - Organization - Personnel / Leadership / Management, industry bodies (Ontario Truckers Association or similar)governing bodies /legislations (regulatory bodies)
Page 9 - Marketing / Sales Activities - your planned strategies / costs / advertising / networking / partnerships / affiliates
Page 10 - Exit Strategy - how is the lender getting his Return On Investment, how is this entity going to separate itself from you with it's money back, and interest, and let you carry on your merry way? loss of ownership after fully repaid or 5 years while you've hit various milestones? buy out when you decide? right of first purchase and right of first refusal if they were to sell their interest? would you sell out?
Page 11 - Market Analysis - what / who is your market, how many widgets should you seel to break even, how many can you sell in a week / month / year, expanded markets / franchising, will these be repeat customers / one time only / recurring revenue streams?
Page 12 - Funds Required and Their Use - how much you want and what will you spend it on, why? how little could you get going with? maximum possible expenditure? detailed / itemised, please. don't forget taxes / accounting / legal / logos / artwork / letterhead / cards / flyers / mailers / warranties / equipments / rents / deposits / communications / website
Page 13 - Financial data - what you've put in, are poutting in plus your effort, they need to see your " Hurt Money "
Page 14 - Forecasting figures for year one, projections through Fiscal Year 3 repayment schemes for the startup loan, project into year 5 with your expansions etc. include professional chart here
Page 15 - Appendices / Exhibits - self-explanatory
Page 16 - Privacy and Confidentiality Policy
Page 17 - Disclaimer
Page 18 - Confidentiality and Non Disclosure Agreement
Page 19 - Circulation Control Sheet
Page 20 - FAQ / notice of copyright / trademarks
Do NOT neglect to include somewhere, your weaknesses, and how to overcome them, or at least mitigate them, include any specific strengths and advantages in this plan as well This should at least get you started, email me if you'd like - particularly those persons in and around Toronto, Ontario Canada. email is yourwizard AT NO SPAM financier DOT com
Question Authority before IT questions You
This sounds extremely simplistic, but countless people, especially those writing business plans for the first time, tend to completely overlook the basics.
Forget about formatting and templates and what section headings to include. These will come together later. Instead, put yourself in a VCs shoes. Pretend you are considering risking a considerable amount of money on an idea and a team that will implement these ideas (assuming your company has no existing product or revenue stream, that it is still in the idea phase). The guise is that if you provide x amount of capital, this group of people will employ it to generate x*n amount of capital in a given amount of time.
Ask yourself, what is it about my ideas or plans will ensure an investor that this is not only going to happen, but happen to such an extent that it will generate many times the amount of capital invested. Investors are not looking to break even, they're looking to make a large increase on the amount of money they invest.
You need to be completely honest with yourself and your idea. If, (as would be natural given the forum,) your idea is based on a technology, remember that an investor has absolutely no interest in how cool or exciting it is or whether it's written in Java or Turbo Pascal. What problem does it solve? How are you going to sell it? Who is going to buy it? How are you going to advertise it? How is it going to generate the many fold return on investment I'm looking for? 10 pages on the design and features of your wild new technology does nothing to address these concerns.
Ask yourself, would you put up however many millions you are asking for with complete confidence? People gripe and moan about greedy VCs, but remember, you're probably asking somebody to take of 100% of the financial risk. If it fails, you could just walk away into another job. The VC may be out millions. What's so special about your idea that this financial risk is worth it?
Finally, consider that the process of putting together a business plan is likely to be far more informative to yourself than any investor, as you are forced to consider all of these questions, and consider your idea in the cold harsh light of reality. If you cannot answer, and answer honestly, any of these questions, then it is more than likely your business idea simply needs rethinking.
I've learned all of this the hard way. Perhaps the simple answer to the question 'What's the best way to write a business plan' is 'many, many times.'
I'm not really familiar with Austrailia, but in the United States most public Universities have Small Business Centers that provide free help.
For example, near where I live in Florida, the University of West Florida offers services.
Or the United States Small Business Association provides resources.
My wife made use of these when she started up her business. Its been about 18 months, not making a profit yet but sales have been increasing.
"You cannot find out which view is the right one by science in the ordinary sense." - C.S. Lewis on Intelligent Design
The title may sound like some sort of LARP show but its not. They get entrepreneurs in front of four VCs each of which has a HUGE PILE OF CASH in front of them. The entrepreneur then explains their product or idea, and says something like "I want 50,000 UKP and you get 10% of my company".
Each VC, or 'Dragon', then says "You sweat too much, I'm out", or "I cant work with you, you're clearly a moron, I'm out", or if you are lucky one will say "I'll give you 25,000 for 15% of your company". Well, that's no good, unless you get all the money you ask for you get nothing. So maybe Dragon 4 will say "I'll give you the other 25k for another 15%". So now you've got your money but you've lost 30% of your company. If you want it.
Anyway, see if you can check out the show (on BBC2 in the UK). Anyone who dithers about figures or sales projections or plans is out on their arse immediately. Anyone who seems to have a clue tends to reject the VCs even if they do get an offer, thinking they can get better elsewhere....
Barry
Comment removed based on user account deletion
I disagree.
VCs are businessmen. They're not in the business of funding ideas but businesses. This is a critical difference. Ideas are cheap, money is cheap, what is hard to find is people who can execute. If what you have is just an idea, my advice is "don't talk to VCs" and more "don't start a business".
Saying that VCs don't take risks is pure nonsense. When they fund a company, all the money they put in is at risk. Millions of things can happen. The product bugs or development takes longer than expected, customers don't want it or not presented that way or not at this price, sales process is too long or too costly, competitors take your biggest customer, a new technology emerges that renders your product obsolete... But most problems are people-related : you hire the wrong person, some key person quits or gets ill, your co-founder slacks or just can't handle the pressure, YOU slack or just can't handle the pressure... If any of these happen, your company can fail and the VCs can lose their money.
Now, that doesn't mean VCs are nice guys. They ARE ruthless. One could argue that they make more money than they deserve. All their efforts are directed towards maximizing profits and minimizing risks. Like everybody else. If your VC thinks that you've become a liability, he will do whatever he can to get rid of you.
But once again, if you fear VCs, you should not start a business. Because VCs are angels compared to customers. Nobody is worse than customers. Customers are ruthless. They are the epitome of ruthlessness. They don't care about you, they don't care about your business, they don't care about your product. They only care about themselves. They will ditch you in a second if they think they can get a cheaper alternative, or if your competitor's sales rep has bigger tits. Your VC has put money in your company, he will always try to protect that investment. A customer just doesn't care.
Don't vilify VCs. They're tough businessmen, nothing more. If you have to deal with one, get yourself a good and experienced lawyer, and make sure you are in a strong negotiating position. And ask yourself this question : "Is the value of the money VCs put in my company (in terms of reduced risk, accelerated growth...) worth the value and control they demand in return? Only you can answer that question.
It would be nice to be sure of anything the way some people are of everything.
that posts that put part of the first sentence in the subject rarely get scored above a 2? Personally, they irritate me so I refuse to mod them up. Maybe it's just coincidence that the people who put part of the sentence in the subject write posts with content that deserve mods of 2 or less.
The parent post seems to offer some good advice about the SBA though with nothing to back it up. There is also a new link that I hadn't noticed in other posts for a resource at inc.com. I would have thought it would warrant a 2+ mod. Perhaps there is something to my theory about the subject line.
Simply stating [Citation Needed] does not automatically make you insightful or brilliant.
If you have to ask about how to write your business plan then you haven't thought things through. Once you have a real concrete idea for what you expect to do and have figured out how you'll manage to make money you'll have the ingredients for the business plan. Once the ingredients are in hand it all boils down to assembling them into a coherent presentation/documnent. Getting that "real concrete idea" DOES NOT involve writing code or evalutating technology at a level more fundamental than getting a AUS dollar figure. Sadly, there are many people who do not understand how to run a business.
Back at the peaceful Simpsons house. Homer is reading "Internet for Dummies".
HOMER: Oh, they have the Internet on computers now!
MARGE: Homer, Bill Gates is here.
HOMER: Bill Gates?! Millionaire computer nerd Bill Gates! Oh my god. Oh my god. Get out of sight, Marge. I don't want this to look like a two-bit operation.
GATES: Mr. Simpson?
HOMER: You don't look so rich.
GATES: Don't let the haircut fool you, I am exceedingly wealthy.
HOMER: Get a load of the bowl-job, Marge!
GATES: Your Internet ad was brought to my attention, but I can't figure out what, if anything, CompuGlobalHyperMegaNet does, so rather than risk competing with you, I've decided simply to buy you out.
HOMER: This is it Marge. I've poured my heart and soul into this business and now it's
finally paying off. (covering his mouth) We're rich! Richer than astronauts.
MARGE: Homer quiet. Acquire the deal.
HOMER: (to Gates) I reluctantly accept your proposal!
GATES: Well everyone always does. Buy 'em out, boys!
Bill Gates companions begin to trash the "office".
HOMER: Hey, what the hell's going on!
GATES: Oh, I didn't get rich by writing a lot of checks!
Bill Gates lets out a maniacal laugh. Homer and Marge cower in the corner as the room continues to be trashed.
...have lots of real-world experience with VC. Yeah, right.
Linux can be a differentiator between your company and your competitors. If mgmt is not interested in leveraging IT (buzzword), then stick with Windows and run with the pack. On the other hand, Linux could be the difference, especially if your industry runs tight margins and/or is highly standardized (retail, for example). At the very least, your company should be doing Linux R&D, just in case one of their competitors runs with Linux.
On a slightly more emotional tack, pitch Linux as the lone carnivore and the status quo as the herd of herbivores. Are your managers predators or prey? Are they risk takers or are they content to split the pot with their competitors.
I'm not big on business books, but one book that impacted me is Thriving on Chaos by Tom Peters. It's an old book, from the late eighties, but the concepts apply today. One of the key concepts is to use innovation to differentiate your company from your competitors.
this one goes by pretty fast, so get ready.
are you ready?
Ok, here it is.
BUSINESS PLAN: "We do stuff for money."
Anything beyond that limits the scope of your success.
It's the funniest comment i've read in a long time, specially for the context. It made me laugh 15 minutes straight. Why is it modded troll? :(
Chum, you want to create a .NET app. You're chopped liver, like all the other .NET developers on the globe. There's no point in securing VC for such a trivial task when kids all over the world are doing it on their spare time running the server in their bedroom. Build it first, and then try to sell it. You're just looking for someone to pay you a salary for starting your 'own' business, and the dot.com world doesn't work that way anymore.
Welcome to the 21st century.
-Billco, Fnarg.com
It discusses more than just business plans, but I highly, highly recommend you read The Art of the Start: Battle-Hardened Guide for Anyone Starting Anything by Guy Kawasaki. ISBN# 1591840562, it's on Amazon for $17.79 (http://www.amazon.com/gp/product/1591840562/). Guy Kawasaki (http://www.guykawasaki.com/) has written several business books with a tech-focus, and was one of the first 'evangelists' at Apple for the Macintosh.
I'm right in the middle of (trying to, at least) following his advice with my own startup, and my girlfriend actually has a fairly successful online store and eBay business that after reading this book, I realized she started up much in the same way he recommends, and she's done well so far.
One interesting concept he pushes heavily in the book is bootstrapping - using your own resources to get the business up and running and generating some type of revenue, and then using that revenue to purchase the things you really need to generate the big revenue, etc. This model works really well for some types of online storefronts - it really all depends on how expensive your inventory is and how many different types/components/colors/sizes you have to stock, as well as how much inventory you need to keep on hand.
Before my girlfriend had enough money to buy a large inventory, she carefully purchased 2-5 of each item she thought she could sell well, up to whatever limit she had on how much money she could spend, and sold those. With the profits she made on those items, she started purchasing dozen-packs of the items that were selling well, and after those kept selling and generated even more revenue, she started using that money to branch out into new products. She's managed to start everything on her personal credit card, and after a pretty rough first year, she even manages to pay the credit card off each month and still have a good bit of money left over.
It's almost embarassing, actually, since the business I'm starting has yet to make a dime.
Obviously, if you have other resources such as a line of credit or bank-loan of some form that will charge lower interest than your credit cards, use that, but never underestimate how much you can do on your own, without needing investors. And once you do need investors, think angel investors, not VC's.
If you still think you'll need more capital than you can fund from personal resources or angels, think about bringing on a partner, someone you know who may be able to contribute some additional resources. Especially if it's someone who is a non-techie or has a more business-oriented background. I'm not talking about hiring an MBA, but it's important to balance your skills, strengths and weaknesses with someone else's, so that when you do hit a situation you don't know how to handle or need assistance with, that partner has a better chance of being able to see it from a different angle and help the business succeed.
Finally, about the business plan - Business Plan Pro is a pretty nice software package (Amazon.com sells it for $16 off the normal price, at $83.99 - http://www.amazon.com/exec/obidos/tg/detail/-/B000 9PF1QO/) that includes quite a few sample plans and other resources and guides for writing a business plan. You can write it on your own, using your favorite text editor, using the websites of SCORE and other organizations as a guide, but I found Business Plan Pro's help with the financials was worth the price of the software. Even though a majority of the numbers in the financials of a business plan are just best-guesses and often completely wild, random guesses, potential investors put a lot of weight into the numbers they see, they want to see that you know how to put together these tables and that they have some sort of reassuring numbers to look at.
And revise it. Plan to revise your business plan often. Write
Parent is mistaken. VC firms don't charge interest. All they ask for is your soul and maybe your first born son.
You must have had an interesting childhood.
Step Number 1
>> Don't ask a bunch of geeks on slashdot about business plans, or anything business related.
Step Number 2
>> Ask this question again once you've located the correct forum for decent feedback... I'd start by searching "small business help" in google.
I started a business some time ago and even managed to get some money invested into it based on my half-finished business plan. What I did write took me quite a few weeks to get on paper and it was a very challenging task.
The idea was good and the few customers I had are still using and are very happy with my products but I didn't get a legal insurance right from the start and unexpectadly got sued at a very early stage! This lead to the end of my business adventure.
So my main advise is: Make sure you insure yourself as soon as possible!
Also stay away from VCs they are a waste of time and energy and although the extra money might help, they will make any bad situation a whole lot worse. Don't forget, most businesses fail!
Replace ??? for invest all the money in a developing country stock market where you can get more then 20% in less then 3 monthes (I really did it), or invest in government bonuses that pays 20%/year.
That was easy.
-=-=-=-=
I know life isn't fair, but why can't it ever be un-fair in MY favor!?
That's how I always start.t artups.asp and thishttp://blog.guykawasaki.com/2006/01/the_zen_of _busi.html>.
And I have written two, including one for billion-dollar "start-up," The Ecko Unlimited Company. Also, read thishttp://evhead.com/2005/11/ten-rules-for-web-s
"We're millions of miles from earth, inside a giant white face, what's impossible?"
Mod parent up. Kawasaki's book comes from the point of view of a VC, and it's negative on "traditional" business plans and on VC.
His point... why spend 6 months writing a document nobody but the VCs will read, when you will be planning your prototype and building it at the same time. A powerpoint presentation format business plan serves two purposes... it makes you plan... which is the important part of the business plan, but it a) gives you a manageable and breatheable document that grows with your knowledge and b) gives you a "pitch" slide deck to go out and find customers... which = OPM (other peoples money).
Until you're comfortable pitching everybody and his uncle to buy your product... don't go to a VC. As many have said, they are professionals at this. Until you've honed your skills on pitching to everybody in the world, and garnered the enthusiasm and skill to bring your vision to the customer, you don't want to swim with the sharks.
In the US anyway, simply incorporating for (on average) $500 brings you a cubic boatload of bank solicitations and low interest rate corporate credit cards. I only have a shell corporation with a business plan... I'm still trying to get my main customers to buy my consulting services (medical) but I've got about $350,000 in bank loans and credit at my disposal.
Which I won't use until a customer engages me in a contract and I need to front money while waiting for accounts receivable to come in.
Buy a book on bootstrapping your business. Those are the skills that will turn you from a geek technician to a business guru.
I mostly agree with this post. VCs are a greedy bunch. Greed at its greatest actually. They'll have you do all the work for your business and then take an incredibly high percentage of your profits or incredibly high stake in your company. How's that for greed? Greed at its finest.
However, they do this because they ARE risk takers. They're offering up loads of capital on your idea. Hopefully your idea works. If not, well those VCs have the possibiliy of getting screwed over. Thus their insanely high take from your hard work.
Work your ass off. Research your ass off. See who you know and what they can do. Network like your life depends on it. In a way, it does, because if your idea is to the point where you think you need a VC, then this business that you are starting up pretty much IS your life and will be your life for a couple years. If you find you still need that couple million dollar infusion (which admittedly is rather hard to get for the average Joe) to get that manufacturing started or what-not, then find that VC and hope for the best.
"He uses statistics as a drunken man uses lampposts...for support rather than illumination." - Andrew Lang
so we at the urgings of many of the local business development resources that were avvailable to us, signed up for SCORE. We knew it would be of marginal value but wanted to make the legitimate folks that we were trying to get connections from happy. so i called and left a message and some old bat called back. his telephone sounded like he was using a loud speaker to talk to us. probably some hearing aid compatible phone or something. well he said he would be happy to meet with us at any time and he could meet with us at some retirement center or at the chamber of commerce. we chose the chamber of commerce he mentions that he's mentoring another mentor and would like to bring that person along. i said fine. so the three of us show up. i think i brought a dozen donuts or something as an insincere gesture that i appreciated their time. we wait a few minutes and they're still not there. Which is understandable because traffic seemed pretty heavy. so the mentoree comes in and is like... "We just got here. i came ahead to let you know he's on his way because he doesn't get around too well." so we sit there for like another 15 minutes. then in hobbles this dude that looked just like colonel sanders. he had TWO CANES he spent about 240 seconds sitting down, and let out this humongous fart, which i can not be sure that he didn't lose his bowels. so he asks us what we do and we tell him that we're a general IT development shop. he showers us with generic advice, some of which i can't say was awful, but it wasn't anything that wasn't common sense. he kept saying "you have to find a niche... you can either rifle shot your way through life or shotgun your way through life." so we tell him how we want to get into government services he blows us off and showers us with more garbage so as he's telling us about how we have to sharpen our focus, mary, his protege starts shouting out things like CAN YOU DO SOMETHING ABOUT THOSE COMPUTERS THAT CALL YOU UP? and CAN YOU DO SOMETHING ABOUT THESE OLD COMPUTERS? PEOPLE JUST THROW THEM AWAY. so anyway, this lasted about 45 minutes. i knew it would be worthless going in, but i didn't think it would be so comedic. oh so this is the best part. i told a few people the above story and it became a running joke. like i'd do things like "YOU'RE SHOTGUNNING! YOU HAVE TO RIFLE SHOT!" well one day i read in the paper that the local black community were all mad because of this "racist" article in the chamber of commerce newsletter... written by our gieser!!! so I hunt down the newsletter, calling like 50 ppl to get a copy and finally got it. it's all about "how to deal with minorities" in the workplace. It was probably a well meaning article, but it was worded in such a way that it sounded so un-PC. all these black groups wanted to sue, etc.
http://www.mississippi.org/Toolkit/mda/busplan.htm
"Dear Business Plan,..."
There's a lot of good advice in the postings already, but a crucial piece that I don't see yet is that the people you take the money from are more important than the money. You should absolutely pay more attention to the source than to the money: turn down good terms from people you don't like (so-called "stupid money"), and accept it from people that you feel have the right stuff and track record to help you succeeed.
I'm a big believer in angels, angel networks and the like. Angels are not hard to find; just network to them and look for formal networks on the web. Raising money is a full-time job--talk, talk, talk, or partner immediately with someone who can.
And, I second the advice to start a business small, with your own money and sweat, if you can and it is that kind of business, with the caveat that you *must* create a team of diverse talents and viewpoints to succeed, and it is definitely worth it to give up equity on a success basis to business and marketing partners who you really like.
That's long already, but if you want more, contact me.