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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?"
You should be asking SCORE, not slashdot. See: http://www.score.org/
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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.
Here's a start. You don't need slashdot's help!
Religion for nerds. Stuff that really matters
Don't take business advice from amateurs, you have a lot to lose.
"...after the rubber hit the road the document meant very little..."
A good business plan is a working document, you keep it updated to reflect where the business is at currently, where it's been and where you want it to go.
Think of it as your master planning document and it will serve you well.
Cheers.
Everything in the Universe sucks: It's the law!
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. 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. :-)
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
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!
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
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.
While writing a business plan is important, I suggest that you concentrate on developing a marketing plan and a strategy for just startup. Things like how to do accounting, business structure, long-term growth and other elements of your business will fall into place. Just don't get behind because your business is doing well.
Your business plan serves 3 main purposes: finding out if our business will actually work, getting you and others inside your business on the same track, and getting money from the SBA or a VC. As others have said, you should look to alternate sources of income other than VC's, as they will want a large share of the company for a small amount of effort on their part. Money's obviously important in starting a business, but you can probably get much further on much less money than you thought if you're willing to budget correctly and put things that aren't necessary on the back burner. Chances are good, since you're a technology company, that your main initial investment is going to be time. If that's the case, work, work, work, work until your business is in place. You won't really need a ton of money. Since you said everyone understands the company on the inside, you really only have one good reason to do it: finding out if your business will be profitable.
Answer these questions honesty: is there any competition? If not, is there any demand for my product? If not, how will I create it? If there is competition, will I differentiate because I'm faster, cheaper, or higher quality? As a side note: contrary to what you might think, price is usually not the #1 reason people buy things. It's trust. If you are trying to compete on price, you're going for the most fickle market: the people who will flip and go to a different product or service in a heartbeat as long as it's cheaper.
I suggest buying Guerrilla Marketing from Jay Conrad Levinson--it has a lot of excellent insight.
Grammar Lesson: you're is a contraction of "you are"; your means you possess something; yore means days gone by.