Elements of a Startup Business Plan


12

I was looking through some posts today about Startups and business Plans and i came across this:

"1. Even VCs don't require a full business plan on your initial meeting. And a business plan for VCs is very different than one you write for yourself. So what are you trying to accomplish? – Dror Oct 25 at 5:30"
If we could distill a business plan down to its simplest form what 5 elements would be the most crucial that you would include in a plan that you would present to a VC?

And, as mentioned in the quote above, a business plan you write for yourself is vastly different. In your experiences, what 5 elements are the most crucial in a business plan you write for yourself? How are our goals different between the two?

Business Plan Project Planning

asked Jan 21 '10 at 10:41
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Eric Amzalag
818 points

6 Answers


12

  1. Define exactly who your customers are and what pain they have you're solving.
  2. How will they find out about you without you having to spend more money than they give you?
  3. How will you make money?
  4. Who are you? (Or: Why are you especially positioned to be successful at this particular company?)
  5. How much money do you need, and for what? (Clearly this is for raising money only)
answered Jan 21 '10 at 11:28
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Jason
16,231 points

8

The five elements that should be in every business plan:

  1. Management/Technical Team: The people who will do the work need to be able to do the work. Describing your team or who you need is critical.
  2. Market Analysis: This includes customer traction and customer pain. Basically, who is going to pay you for your widget along with how big the market is and who else is servicing it.
  3. Technology/Product Definition: What unique product or technology does the venture bring to the table that solves the customers pain.
  4. Development Plans: Schedules and Milestones of how you will bring your product to market as well as the features and functions it might contain.
  5. Pro-forma Financial Model: 3-5 years of pro-forma financials that show the companies burn rate and when it will be profitable.

I disagree that the business plan you write for yourself is different that the VC plan. Any business plan I do, I would have these 5 elements. My take is that you need to think like an investor in order to ensure that your idea has merit.

answered Jan 22 '10 at 00:01
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Jarie Bolander
11,421 points
  • @Jarie: Do you agree though that the business plan should be tailored for the audience? For instance, you might change some information in the business plan that you give to a bank versus a VC. Agree/Disagree? – Matthew Rankin 9 years ago
  • I do agree that you need to tailor to the audience. VC's want the billion dollar market and an exit in 3-5 years. A bank will want to see that you are making money and can pay them back. – Jarie Bolander 9 years ago
  • On that same note, wouldn't you want to tailor a business plan to yourself as well? As an entrepreneur i would be hesitent to provide myself with a plan that has a 5 year structure to it. I want to be able to follow a basic skeleton plan and be able to deviate from it if need be. I do think you are correct that the elements are the same, but perhaps how you go about building those descriptions up might be slightly different – Eric Amzalag 9 years ago
  • I would start with the investor perspective and then modify from there. It is better to think of this as an investment with some return in a period of time. That way, you can really understand the ROI. As an entrepreneur, you should have a long term strategic plan. It might not be 5 years but it should be at least 2 years out. – Jarie Bolander 9 years ago

3

For yourself, there's really only one key thing you must have in your business plan: it must tell you what to do next. The difference between your goal there and your goal for a business plan for a VC is that for the latter your goal is to prove to the VC that you know what to do next. That said, here's my 5:

  1. Be clear about your customer -- what their challenges are, what they value, how they spend (for a VC, be able to prove you know this).
  2. Be clear about your product or service -- what it is, how it works, why your customers care, how they pay for it, and why they pay so much for it. You'd be surprised how many plans I've read that never clearly explain what they're for.
  3. Know how you produce your product or provide your service -- every. single. detail. How many times a day will you pick up the phone? Why? How does the box get from here to there? Do you need a fax? What will you fax? Etc. Know the cost of every single step. (For a VC, be able to prove you know this.)
  4. Be clear about your specific advantage over your competition (this requires being clear about your competition too). How do you produce that advantage? Who cares? Why? Bonus: be clear about how this advantage is sustainable.
  5. Know how much money you need to get there. Even if you never ask for external money... well, how do you know if you don't need outside funding if you don't know how much money you'll need to launch? Know every single detail. (For a VC, provide this information in standard financial statements.) Bonus: don't forget to include payroll taxes. Half of everyone forgets payroll taxes.
answered Jan 21 '10 at 12:29
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Wade Armstrong
181 points

1

Thanks for the tips. So in a presentation slide , the sequence of slides would be something
like
Introduction - 2 lines about company
What problem does it solve
How does it solve the problem
How will the revenues be generated
Market Size
Competitive Landscape
Competitive Advantage
Team

I have been looking for a good example of a business plan and not sure what exactly should be the format.
As you might have guessed, objective is to raise money

answered Jun 7 '10 at 13:45
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Skillguru
344 points

1

1) Marketing-

  • Overall plan
  • Targeted Prospect surveys
  • Website with analytics data
  • Feedback mechanism for marketing
  • USP

  • Feedback on USP (proof of concept)
  • Pricing

2) Competitor analysis

  • Complete listings
  • SWAT

  • Financials
  • History

3) Projections

  • Cash Flow
  • P&L

  • Investor returns

Everything else is fluff.

answered Dec 1 '10 at 18:26
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Rp Joe
149 points
  • swat = swot analysis – Daniel Kutik 7 years ago

0

You should cover

  1. How you are addressing a key pain point in your target market
  2. why you will have sustainable competitive advantage
  3. How you will be able to make money over time
  4. why you and your management team are uniquely qualified to accomplish the above
  5. the projected returns for the investors - show a conservative set of assumptions and valuation rates - do NOT overhype this part.
answered Jun 8 '10 at 02:31
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Warren E. Hart
2,181 points
  • Thanks for the inputs. Although I am not sure how to show returns. It is so nearly impossible to show how much revenues you are going to make over time. – Skillguru 9 years ago
  • As long as you make clear and explicit assumptions, you can show what kind of revenue you might attain and then you should be able to show some assumptions on expenses. Then, you can apply some valuation rates (use the low end of your competitors) and show investors at least some idea of what kind of return on investment they might get. Don't forget to point out EXPLICITLY that they could lose all their money and that an investment in a start up is NOT liquid. – Warren E. Hart 9 years ago

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