Business Plan Writing? (1 Viewer)

[TripItUp]

I need to write a business plan for a venture that I'm undertaking.  The problem, I've never done it before. 

Audience for the business plan would be future shareholders, Board of Directors, Investors.

Where is a good place to start? 

Thanks!

P.S.  When I sell my business to Google for 20 million, everybody with a contribution to this thread will get a cut.

 

[Bucky86]

Women in yoga pants on every page.

 

[msommer]

I need to write a business plan for a venture that I'm undertaking.  The problem, I've never done it before. 

Audience for the business plan would be future shareholders, Board of Directors, Investors.

Where is a good place to start? 

Thanks!

I like the business model canvas it makes sure you get to think all aspects through.

place to start

You just might be able to find an ocr copy somewhere 

 

[TripItUp]

I like the business model canvas it makes sure you get to think all aspects through.

place to start

You just might be able to find an ocr copy somewhere 

Thanks, what is "ocr" ??

 

[msommer]

Thanks, what is "ocr" ??

Optical Character Recognition

 

[Captain Cranks]

I underwent this process a couple of years ago for my business.  It's no small undertaking, so the first thing to do is assess whether you have time to do it on your own.  There's obviously people you can pay to compile it for you.  Assuming you do it yourself, just do a Google of business plans to understand what information you'll be pulling together.  Standard business plans include an overview of your business, explanation of how you'll capture market share, who's your competition, what risk factors affect the business, pro formas for the next two or three years including detailed estimates of revenues and expenses (this is not easy), and how will you execute your plan.

You'll probably also want to talk to a securities lawyer.  When you're dealing with investors, you can't be loosey-goosey with what you convey to them.  

 

[Abraham]

I've written at least a dozen business plans. There are some nice books about it including Business Plans for Dummies.  Of special consideration...

- Your people / leadership team

- Market research

- Market economics

- What you are selling

- Company economics with projections of spend and revenue

- Competitors

- Risks

Absent a book or guidelines, the 7 bullets above (if properly fleshed out) are a nice framework upon which to build a business plan.

 

[Mister CIA]

I need to write a business plan for a venture that I'm undertaking.  The problem, I've never done it before. 

Audience for the business plan would be future shareholders, Board of Directors, Investors.

Where is a good place to start? 

Thanks!

Step 3: Profit

 

[msommer]

Where is a good place to start? 

1: Make a hole in a box

2: Put your junk in the box

(I can't believe I missed this setup....)

 

[TripItUp]

I underwent this process a couple of years ago for my business.  It's no small undertaking, so the first thing to do is assess whether you have time to do it on your own.

No children, no wife.  Work week is standard so I think I can cover this at nights/weekends.

If I wanted consultation or a review of the plan, where would I go?

 

[ChainsawU]

Check and see if your city has any small business programs/classes. That will be one of the basics they offer. If not, at least contact the city and see what resources they offer small business that are trying to get started. Usually those people have pretty boring jobs in the first place so if you seemed motivated they'd probably jump at the chance to help you.

 

[ChainsawU]

Off the top of my head I would put it together like this:

environmental analysis, internal and external
stakeholders and perspectives (who is effected by the business and what is important to them)
planning/strategy overview
leadership overview
organizational overview
control overview
risk assessment and mitigation
and then probably something like smart goals to finish it off

 

[TripItUp]

Off the top of my head I would put it together like this:

environmental analysis, internal and external
stakeholders and perspectives (who is effected by the business and what is important to them)
planning/strategy overview
leadership overview
organizational overview
control overview
risk assessment and mitigation
and then probably something like smart goals to finish it off

So would I be correct in saying that business plans come in all shapes and sizes?  It sounds like there isn't a standard plan/outlilne that is used, is that accurate?

 

[ChainsawU]

You'll probably also want to talk to a securities lawyer.

I always cringe when someone recommends talking to a lawyer about stuff like this; business plans or starting LLCs, corporations, etc. With all the information available to us online, unless he/she is a close friend, I wouldn't. And why a hire a securities lawyer to help you write a business plan. That doesn't make sense at all.

 

[TripItUp]

Just ordered business plans for dummies...we'll see how good it is.

 

[Captain Cranks]

I always cringe when someone recommends talking to a lawyer about stuff like this; business plans or starting LLCs, corporations, etc. With all the information available to us online, unless he/she is a close friend, I wouldn't. And why a hire a securities lawyer to help you write a business plan. That doesn't make sense at all.

He mentioned this would be distributed to shareholders/investors.  If this is going to be part of a larger investment package like a PPM, he'll need a securities lawyer.  I never said the securities lawyer is going to "help you write a business plan".  

 

[ChainsawU]

It will probably be perfect. It will probably approach the subject like a textbook, but with all the extra crap you don't need taken out. Also, it might sound dumb, but go get a library card if you don't already have one. There are a ton of resources available through the public library database that you can use to do research. And you can find all that stuff just by logging into the library's database from your home. It will make it so much easier finding precedents and examples of things that have worked/failed in whatever industry you're pursuing. And you're right, as business plans come in all different shapes and sizes. The shape, feel, and look of yours will reveal itself once you do all your research.

Honestly, there are a ton of college-aged kids doing this same kind of research in school every day. The only difference between you and them is that they're not going to use it for anything worth a damn.

 

[TripItUp]

He mentioned this would be distributed to shareholders/investors.  If this is going to be part of a larger investment package like a PPM, he'll need a securities lawyer.  I never said the securities lawyer is going to "help you write a business plan".  

I've got a strong referral for a securities lawyer.   I'm good there.

 

[TripItUp]

Off the top of my head I would put it together like this:

environmental analysis, internal and external
stakeholders and perspectives (who is effected by the business and what is important to them)
planning/strategy overview
leadership overview
organizational overview
control overview
risk assessment and mitigation
and then probably something like smart goals to finish it off

environmental analysis, internal and external -  not sure what this means
stakeholders and perspectives (who is effected by the business and what is important to them) - seems easy enough
planning/strategy overview - got this one
leadership overview - got this one
organizational overview - got this one
control overview - got this one
risk assessment and mitigation - got this one
and then probably something like smart goals to finish it off - got this one

I could knock this out in a few weeks.

 

[msommer]

environmental analysis, internal and external -  not sure what this means
stakeholders and perspectives (who is effected by the business and what is important to them) - seems easy enough
planning/strategy overview - got this one
leadership overview - got this one
organizational overview - got this one
control overview - got this one
risk assessment and mitigation - got this one
and then probably something like smart goals to finish it off - got this one

I could knock this out in a few weeks.

Personally I'd start thinking about your prospective customers, who are they and why should they buy what you have. What alternatives do they have (even if they are piss poor alternatives)?

Then think about how you will reach them. both in a sales sense and how to deliver the product or service etc.

Once you have that down, do the rest of the steps above and/or from Osterwalder's book

IMHO the whole thing starts with your customer, without a (happy) customer, you got nothing

 

[TripItUp]

I've written at least a dozen business plans. There are some nice books about it including Business Plans for Dummies.  Of special consideration...

- Your people / leadership team

- Market research

- Market economics

- What you are selling

- Company economics with projections of spend and revenue

- Competitors

- Risks

Absent a book or guidelines, the 7 bullets above (if properly fleshed out) are a nice framework upon which to build a business plan.

- Your people / leadership team - got this one

- Market research - this really depends on how much is needed, but this seems attainable

- Market economics - this seems attainable, but slightly more challenging, just really depends on what's publicly available

- What you are selling - easy part

- Company economics with projections of spend and revenue - this will be really difficult, and probably the most time consuming

- Competitors - got this

- Risks - got this, I think

 

[TripItUp]

Personally I'd start thinking about your prospective customers, who are they and why should they buy what you have. What alternatives do they have (even if they are piss poor alternatives)?

Then think about how you will reach them. both in a sales sense and how to deliver the product or service etc.

Once you have that down, do the rest of the steps above and/or from Osterwalder's book

IMHO the whole thing starts with your customer, without a (happy) customer, you got nothing

Makes sense, thanks. 

The marketing part is the most difficult for me, and likely my biggest spend...I'll need a 3rd party consultant/firm to help put that together.  S.E.O., website, social media, digital advertising...are all obvious avenues that I know very little about from a cost perspective...I've just heard marketing/PR firms are the suck and aren't really worth what you pay for.  That being said, branding will be extraordinarily important so I'll likely have to bite the bullet.

 

[msommer]

Makes sense, thanks. 

The marketing part is the most difficult for me, and likely my biggest spend...I'll need a 3rd party consultant/firm to help put that together.  S.E.O., website, social media, digital advertising...are all obvious avenues that I know very little about from a cost perspective...I've just heard marketing/PR firms are the suck and aren't really worth what you pay for.

Yes that bit is hard. Even if you go talk to people yourself sometimes they just tell you what you want to hear and chances are you won't notice until it is too late (confirmation bias).

Also there is a big difference between what people say they are willing to pay for and what they actually are willing to pay for.

 

[Abraham]

I'll be glad to give it a read as you go. 

 

[TripItUp]

I'll be glad to give it a read as you go. 

Awesome, thanks.

 

[TripItUp]

One of my struggles is do I want to raise 10 million and really blow up the marketing or do I want to just raise 500K and start conservative and own a larger percentage of the business...I just don't know what the critical number is for marketing costs...my biggest unknown.

 

[Abraham]

Your first order of business is to build something someone wants. Depending on the cost per unit, that might mean 5 sales or 100. But once you demonstrate that someone will buy it you can raise money at a much better rate. And even with all the connections in the world it is unlikely you can raise 7 figures (much less 8) off the bat unless you have a couple successful exits under your belt. 

My old company is worth a couple hundred million now and was started by a guy who was hyper focused on finding 50 people to pay him 30$/month for what he was offering. Once he did that (took four months, just him and one other guy) it was easy to raise 5 million.  Followed that a year later with 12 more and two years after that for 25 (of which he and the other guy took a million off the table and bought matching teslas)

 

[TripItUp]

Your first order of business is to build something someone wants.

It's a highly in demand service to small and medium sized businesses which I have expertise in and a very strong network...there is a shortage and to some extent a void in the market for said professional service.

There are a lot of pseudo-competitors but this is a unique value proposition/business model.

I've got about 500K lined up from close friends and business partners, but the decision for me is just how big I want to go.  The pressure of 10 million in debt isn't something I'd look forward to...I may prefer to grass root it and start almost completely self funded.  That being said,  I want to shop the idea around to see what all of my options are.  Basically in intelligence gathering mode. Gonna need an attorney right out of the gate to help with NDAs and such.

 

[kutta]

I agree with @Abraham - it's going to be very difficult to raise $10M without some kind of track record. I also agree with @msommer in that you need to focus on who your customers are or will be.

My two cents:

1. Focus on sales and profit in your business plan. Everything else is secondary. If you don't have a clear path to revenue and profit, you don't have anything.The hardest part of any business is sales. Getting people to part with their money for your product/service is MUCH more difficult than most people realize.

2. Start small and with the least amount of debt you can. It gets easier as you go to raise money if you are successful. And you don't want to take on a bunch of debt before you are sure you will be successful.

The best advice I ever got with my business was to not take investment dollars and give up equity. I realize your situation is different, but investments and equity complicate things in ways that are very difficult to see initially. If you can do it on your own somehow, I can't stress enough how much you should strongly consider doing it. 

 

[TripItUp]

I agree with @Abraham - it's going to be very difficult to raise $10M without some kind of track record. Agreed.  I also agree with @msommer in that you need to focus on who your customers are or will be.  That's really the easy part here. 

My two cents:

1. Focus on sales and profit in your business plan. Everything else is secondary. If you don't have a clear path to revenue and profit, you don't have anything.The hardest part of any business is sales. Getting people to part with their money for your product/service is MUCH more difficult than most people realize.  Agreed.

2. Start small and with the least amount of debt you can. It gets easier as you go to raise money if you are successful. And you don't want to take on a bunch of debt before you are sure you will be successful.  Agreed, but I do want to see how much enthusiasm is out there from investors and would also like to take in some constructive criticism.

The best advice I ever got with my business was to not take investment dollars and give up equity. I realize your situation is different, but investments and equity complicate things in ways that are very difficult to see initially. If you can do it on your own somehow, I can't stress enough how much you should strongly consider doing it. That's where I'm leaning, I work with business owners on a weekly basis that regret the percentage of equity given up.

 

[Abraham]

Your perception that the competition either isn't existent or isn't doing the same thing is false. 

- there is a competitor that you simply don't know of. 

- there is a competitor you do know of but you don't know that they are about to raise a #### ton of marketing dollars 

- there is no competition, which is the worst possible thing. 

- the competition will pivot to your model the moment they see that it is viable. 

 

[Abraham]

That said, I have started a lot of businesses that have failed and been part of a few that have been wildly successful. The primary difference was money - my business was always in a cash crunch because we didn't have enough runway to make smart long term moves. If you can raise 10 million and end up with 5% of a 100mm business than that is a #### ton better than having 51% of a 1MM business that has to go to the bank once a week to renew the line of credit. Angie, of Angie's List, owns 3% of that company. But she owns 3% of that company. 

 

[TripItUp]

Your perception that the competition either isn't existent or isn't doing the same thing is false. 

perhaps, I know the marketplace pretty well...like I said, there are pseudo competitors

- there is a competitor that you simply don't know of. 

perhaps

- there is a competitor you do know of but you don't know that they are about to raise a #### ton of marketing dollars 

perhaps

- there is no competition, which is the worst possible thing. 

implying that there isn't a market, I get it.

- the competition will pivot to your model the moment they see that it is viable.

Definitely something I've been worried about/thinking about a lot

 

[Abraham]

You have to know that you have at most 6 months before a strong player in the space at least tests out a version of what you are doing. Many online shopping sites are successful because they are too niche and expert for Amazon to replicate, for example. But that's also the reason they stay in their niche. Also, behemoths like Microsoft have no interest in entering markets worth tens of millions of dollars. But the moment the market shows itself to be worth billions they will move in or buy you. 

 

[kutta]

That said, I have started a lot of businesses that have failed and been part of a few that have been wildly successful. The primary difference was money - my business was always in a cash crunch because we didn't have enough runway to make smart long term moves. If you can raise 10 million and end up with 5% of a 100mm business than that is a #### ton better than having 51% of a 1MM business that has to go to the bank once a week to renew the line of credit. Angie, of Angie's List, owns 3% of that company. But she owns 3% of that company. 

While I somewhat agree with this, I also think there are many different ways to make things work. My partner and I both put $5K into our business and never had to invest another personal dollar because we had sales right out of the gate and we built slowly from there. We had many opportunities for investors along the way (14 years before we sold it), and we always listened but always turned them down. We wanted to be the ones to make the decisions for the company.

And I'm not sure I agree with your premise that owning 51% of a $1M is worse than owning 5% of a $100M company. It really depends on what your goals are and what the future looks like. I think having the ability to control your own destiny is worth a whole lot. 

 

[Abraham]

While I somewhat agree with this, I also think there are many different ways to make things work. My partner and I both put $5K into our business and never had to invest another personal dollar because we had sales right out of the gate and we built slowly from there. We had many opportunities for investors along the way (14 years before we sold it), and we always listened but always turned them down. We wanted to be the ones to make the decisions for the company.

And I'm not sure I agree with your premise that owning 51% of a $1M is worse than owning 5% of a $100M company. It really depends on what your goals are and what the future looks like. I think having the ability to control your own destiny is worth a whole lot. 

We are approaching the same side of the coin from different places I think.  If the OP is talking about raising 20MM to put into marketing than it sounds like its a potentially huge market; you don't get 20MM for a business that turns in to 50MM in the best case. 

 

[bueno]

Just ordered business plans for dummies...we'll see how good it is.

That is probably a good place to start. I've written many nusiness plans, but I am in a specialized industry (precious metal mining and exploration).  My format may not work for you because marketing is pretty simple in my line of work..

 

[MattFancy]

I need to write a business plan for a venture that I'm undertaking.  The problem, I've never done it before. 

Audience for the business plan would be future shareholders, Board of Directors, Investors.

Where is a good place to start? 

Thanks!

P.S.  When I sell my business to Google for 20 million, everybody with a contribution to this thread will get a cut.

I was an intern at the Small Business Development Center in Towson, MD. Not sure where you live, but check to see if there is something similar where you are. Pretty sure it's all free services that they offer.

 

[mr roboto]

While I somewhat agree with this, I also think there are many different ways to make things work. My partner and I both put $5K into our business and never had to invest another personal dollar because we had sales right out of the gate and we built slowly from there. We had many opportunities for investors along the way (14 years before we sold it), and we always listened but always turned them down. We wanted to be the ones to make the decisions for the company.

And I'm not sure I agree with your premise that owning 51% of a $1M is worse than owning 5% of a $100M company. It really depends on what your goals are and what the future looks like. I think having the ability to control your own destiny is worth a whole lot. 

Yeah but IIRC yours is a consulting/cash flow generating business not one that would have a potential huge valuation. I agree that for many small businesses it doesn't make sense to take on much external funding right away if ever - but a business that has a large market - bootstrapping that is a bad idea. Believe me I'm in the middle of that screaming at our founder that he needs to let go of 'I won't lose majority control' because we could really explode with about 2Mil right now. 

 

[Captain Cranks]

No children, no wife.  Work week is standard so I think I can cover this at nights/weekends.

If I wanted consultation or a review of the plan, where would I go?

Honestly, I would suggest getting several people you know that aren't familiar with the business and its nomenclature to review it and provide their thoughts.  My wife and father reviewed mine and were able to provide a ton of "what does this mean?" type questions because I took a lot of the terms for granted as though everyone would know what I was talking about.  You want to make it quick, concise, and make sense to the average layperson (dumb it down a bit).  

Here are some other dos and don'ts:  http://www.inc.com/articles/201104/business-plan-dos-and-donts.html

 

[Jayrod]

I agree with @Abraham - it's going to be very difficult to raise $10M without some kind of track record. I also agree with @msommer in that you need to focus on who your customers are or will be.

My two cents:

1. Focus on sales and profit in your business plan. Everything else is secondary. If you don't have a clear path to revenue and profit, you don't have anything.The hardest part of any business is sales. Getting people to part with their money for your product/service is MUCH more difficult than most people realize.

2. Start small and with the least amount of debt you can. It gets easier as you go to raise money if you are successful. And you don't want to take on a bunch of debt before you are sure you will be successful.

The best advice I ever got with my business was to not take investment dollars and give up equity. I realize your situation is different, but investments and equity complicate things in ways that are very difficult to see initially. If you can do it on your own somehow, I can't stress enough how much you should strongly consider doing it. 

Ding ding ding.

As a former CPA, I did several business plans with people.  There are a lot of approaches depending on industry, product vs service and who you are approaching, but one universal truth....if it doesn't make people money, they won't invest.

You have to show HOW you are going to make a profit, which includes quantifying all revenue and expenses and more important than that; will it cash flow?  The more numbers you have some kind of logical backup for and aren't just guessing, the more believable you will be.

 

[kutta]

Yeah but IIRC yours is a consulting/cash flow generating business not one that would have a potential huge valuation. I agree that for many small businesses it doesn't make sense to take on much external funding right away if ever - but a business that has a large market - bootstrapping that is a bad idea. Believe me I'm in the middle of that screaming at our founder that he needs to let go of 'I won't lose majority control' because we could really explode with about 2Mil right now. 

I agree there are times when money is needed and you have to get an investment. But the OP did say he saw a path where he could do it on his own, so I think he should really evaluate that before taking on funding.

My business started as consulting but turned into much more - we have a lot of software and products that we sell/license also. But your point is a good one. In order to maximize your valuation you have to have some Intellectual Property and some sales of that IP. I sold part of my first business in 2006 and that was strictly consulting. The valuation of the second business in 2015 was much different due to the IP involved.

 

[mr roboto]

I agree there are times when money is needed and you have to get an investment. But the OP did say he saw a path where he could do it on his own, so I think he should really evaluate that before taking on funding.

My business started as consulting but turned into much more - we have a lot of software and products that we sell/license also. But your point is a good one. In order to maximize your valuation you have to have some Intellectual Property and some sales of that IP. I sold part of my first business in 2006 and that was strictly consulting. The valuation of the second business in 2015 was much different due to the IP involved.

Gotcha. Good for you man. Glad you expanded beyond 'exchanging your time for money' phase. 

 

[Johnny Rock]

I'll echo the "don't give up equity easily" mantra. If you can start it on your own with the friends/business associate investors you already have, do that. Other opportunities will present themselves later. 

All the VC talk this early in the process, while important to think through just like all angles of the business plan, really just slows you down from actually STARTING the business and getting sales.

Regarding marketing, I don't see a need to go with a huge budget large marketing firm and you seem reticent too. That doesn't mean you need to accept poor quality or unprofessional work. Find a vibrant, smart upstart that you believe is a good fit for you. They will treat you like gold and be more communicative and nimble. Lots of talent in that space - web design, social media, creative needs, viral, etc.