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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?"
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
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.
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
Alot of SCORE types are retired business execs who have little computer sense or ability. Which makes them horrible for evaluating business ideas.
This also is seen in the banking culture in different parts of the country. Shop one in in the Ozarks and you may get one result, vs shopping it in Silicon Valley. Some advisors only know a certain type of industry, so you want an advisor with experience in the area you are interested in. And even then....
The retired former owner of a car wash chain might not be the right person to advise you on your web startup.
"It is a greater offense to steal men's labor, than their clothes"
I'll second your advice on Kawasaki. His book Art of the Start is definitely a must read. While you may be right that most VCs are assholes, you are wrong in saying they aren't risk takers. Investing in startups is probably the most risky investing job there is. They say you aren't a real VC until you have lost at least 20 million dollars of your own money.
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.
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
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
Comment removed based on user account deletion
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.
Two things:
1) Don't use VC's as a Stalking Horse. It's considered poor form.
2) If you need someone else to tell you whether your business will be able to make money or not then you probably don't understand what you are doing well enough to actually succeed.
I'd strongly disagree. There's a lot of very "common sense" Old-School business still at play out there. As much as those on the forefront like to talk about Web 2.0 and AdWords and streaming-this, RSS-that, many times people understand the technology without understanding the concept of customer service, communication, etc. etc. The list of companies that delivered an interesting concept without being able to execute on it correctly could fill a phonebook.
I'd personally rather hear advice from the car wash chain owner than some new "e-vision" guru that happened to get lucky during the
Small potatoes make the steak look bigger.
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.