Last week I attended a session on writing business plan, organized by our school of management. I found it very useful, here is what we learned.
A business plan is a kind of wiki document, which is dynamic yet contains all the aspects of the product from business perspective. One mistake that people often make is thinking it as a grant proposal or a scientific paper specifying the specification of the product/idea. It should be very simple yet informative with business as prospect.
Business plan in short should specify following
1. Business description
2. What is the product or service
3. Who will buy it and why
4. How will you produce and develop it
5. What is your marketing strategy
6. Can you make profit out of it
7. Is your team competent enough, if not what do you plan to do
You generally start with a mission statement and objective. Don’t write ideas about changing the world or making things beautiful (Mark Zuckerberg is an exception). Talk from business perspective. The goal is to earn money. For instance an objective like “Earning $$$$ by YYYY“ & “being top Z in KLMN market share“.
A business is always about solving a problem and you make money in exchange of that solution. However in recent times we have seen things changing. Markets which never existed were created,
for example iPAD. However you still focus on customer problems and how your
product can solve them or make them efficient. As the author in UX Design for startups
explains, always formulate your solution as Customer-Problem-Solution (CPS), where you start with who the customer is and their problems and how your solution helps them. You may also include profits with your solution to each problem.
Further it should include current stage of development, the further ahead you are better chances of funding. Also include specific milestones, more detailed and through the better. On internet the biggest factor is anyone can pirate your idea. Your strategy to protect it would play crucial role and will give confidence to investors in you.
Revenue model is one single most point of interest for any investor. Be precise on who will pay for it (find your customers) & also find how much will they pay and what services/products do they pay for. How much profit do you really make?
Any business starts from customers. Before coming up with a solution verify if there is a problem in the first place. To identify this do a market assessment. First find how big is the opportunity, what is the upper bound. Once done find what portion of the market are you targeting on. Don’t make the mistake of considering whole market as your target area. Focus on small and define it clearly.
Once you identify your market, find how market will accept your product. There are different levels on which you can measure acceptance of your product/idea by market.
1. You just believe
2. Validated with customer reviews/polls
3. Spoken/interviewed potential customers/affiliates
4. You received purchase orders or customers supported you on sites like kickstarter.
5. Generated $$$ in sales.
Finding your competition & your strategy to stand out is another important aspect. Tell what is so unique about your product/solution. Make a competitor matrix and show how you stand on that scale.
Now that you have done everything and have your product ready, how will your customers find you? Tell about your marketing strategy. Think from a customers perspective and ask yourself on how do you search for solution. If googling was one of the answer then a higher page rank or SEO keyword techniques can get you to your customers. If it’s an mobile app, advertising on Facebook may find you more users. Be specific about the geographic location, customer demographics and pricing strategy.
If you are an internet company tell about how you will develop your product, code repository cost, server costs. Also include additional workforce you will hire for sales or marketing.
As they say investors will always invest on a A team with B idea than a B team with A idea. So team plays an important role. Put relevant experience, accomplishments and if there are any gaps, what is our strategy in filling that. Enlist key advisers in your relevant area.
Should include income statement, balance sheet and cash flow statements, usually for 5 years. All your assumptions must be chained into the plan and how they affect your finances. In addition if you are looking for funding, put milestone on when and how. There are two ways of growth, organic and disruptive. Former mostly run’s on founder’s money to start with and then grows with profits. Latter seeks investment from the market and gets things done quicker. Identify which type you are & how they impact your business.
Write clearly and concisely. Do not overuse technical terms, support your statements with facts. In short consider this as your Graduate school essay writing exam and be assertive & convincing. In addition show your engagement with customers, focus on money & how committed you are. Be optimistic and look for big market share. Never assume/understate marketing by saying “The product is so cool that it will sell by itself”.
This is a living document, keep revising it every sprint. Always remember market keeps changing so adapt and succeed.