Starting to write a business plan before becoming a company


4

I'm starting to write a business plan for a possible future startup.
We're still not a company and we're pretty much in garage-mode still holding to our day jobs.

I was looking at example business plans around the web, and in all of them the companies writing the documents were apparently already formed companies.

For example, the first few chapters of the business plan usually describe the company, so in every one of them it was written explicitly that the company is a limited company and etc...

Company Name Ltd. (hereby: Company Name or “the Company”) is a start-up
company bla bla bla...
So if we're not a company yet (which I understand is not that uncommon with young start-ups that are looking for funding), how should I describe the company? Should I even call it a company?

Legal Business Plan

asked Jun 22 '12 at 00:06
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Orchestrator
149 points
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4 Answers


5

You should start by mentioning that you are a startup team planning to start a business under "XYZ" company name, then continue to describe the company as you plan to set it up.

Make sure to include:

  1. What will the company be doing
  2. What form of enterprise will it take - most likely LLC
  3. Who are the owners and what percentage of the company will they hold
  4. Where will you be headquartered

Then continue with other business planning sections.

Hope this helps.

Good luck!

answered Jun 22 '12 at 01:19
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Pvukovic
561 points

1

I think you are way too early for a business plan. You are worrying too much and trying to plan too much. If you are still in the early garage stage, you need to flesh things out a lot more before you could even begin to know all of the details necessary for a business plan.

In my opinion, a business plan in fairly unimportant in the early stages. Write it when you need funding or a bank loan. Business plans in early stages will kill your creativity and lock you into a way of thinking. If I had written one, I never would have endeavored into some of my most profitable ventures.

At this stage, you need to worry about 90-day cashflow projections and you need to redo it every 30 days roughly, unless something causes a drastic change. When you start shipping or selling, you need to know what your fixed costs are and where your breakeven point is. After that, the next layer to add on is a projection of what you need to ship or sell to hit a comfortable profitability number. That may be two stages: first stage is sustainability and second stage is the point where all the founders can leave their jobs.

All of this is certainly part of a business plan, but if you flesh it out right now it will be nothing more than a guesstimate I promise you. The information is still coming and still being formed as you go. Do not be bogged down in "paralysis by analysis" and do not let setbacks keep you down. They will come. I try to always keep in mind the old saying, "If you waited for all the lights to turn green before you left, you would never leave the driveway."

If you feel compelled to write something right now, how about a Mission Statement? :)

answered Oct 9 '12 at 05:14
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Need A Geek Indy
562 points

1

I appreciate that we live in a "plan-centric" time where the first step to every potential challenge is write a plan. But if the writing of a plan gets in the way of starting a business -- perhaps a road map, or a task list, or a game plan would be a better solution?

I appreciate that securing external funding is often perceived as the first critical step. It is rarely the best first step. And if it is -- it is usually from people who are vesting the initial money in the idea and the people and are not looking for a complete business plan. Know who you will be approaching and what they really need to see before launching into a new plan.

I recommend that you make yourself the audience for the plan. What do you need so that you can become fully committed. Once you are and the company is going, then you can feed back into the plan the real tactical experience you are gaining to write a plan for a prospective investor.

In all the years I have never included where we would be headquartered in any plan. We certinally didn't include the ownership cap tables in th intial material provided. And the organizational structure -- heck that will be determined when you form with the investor. That was part of the conversation after we had earned a real qualified interest.

I recently launched a new start-up for "myself" after years of working on other peoples. We secured initial funding before we had incorporated. We made the initial funders co-founders. Our business plan remains a financial projection, and a series of one page info graphics. They flow together and tell a compelling story. And no where do we ever say "Company Name Ltd. (hereby: Company Name or “the Company”) is a start-up company bla bla bla.." So I say; think outside the plan.

Tell your story in a way that the target market can hear it, and engage with it. If you determine it has to be a "plan" then find a good template for your specific business and use a lot of cut-copy-paste.

answered Jun 22 '12 at 13:36
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Joseph Barisonzi
12,141 points
  • Hey Joseph, thanks for your thorough answer! At the moment we we can not move forward efficiently without some funds. So we must attract investors, and for that we would probably need a bussiness plan as most of them require that. Also, I think that the process of writing a full business plan is actually helpful as it makes you think thoroughly of all the things you need to do that are vaguely thought of in the back of the mind, and make them become more concrete ideas. – Orchestrator 7 years ago

0

I agree with the other response. No one will invest in any start-up without understanding how the start-up will be set up legally. Depending on the type of funding you seek, some organizational structures are more favorable than others.

answered Jun 22 '12 at 10:20
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Kimberly Loftis
39 points

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