“Hey Frank, what’s the best Business Plan software?”

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< here is my response to an email I get roughly once a month….>

Hi xxxxxx,

My first response is that business plans are absolute pants for start-ups.

If your venture is based on 80%+ known-knowns, clearly articulated business drivers and risks, then a business plan is for you.

In that case, with some certainty and luck you can predict revenues and costs in two quarters from now- you might even have a shot at twelve quarters from now.

If your business plan is for a startup there are precious few certainties at all.

Delivering a business plan with certainty, 3-5 years cash, p&l and balance sheet is somewhere between a joke and a lie.

I don’t recommend it.

My advice is to build and share a document that reflects a business model, competitive landscape analysis, team profile and vision.

The stuff you know about your business.

Add very high level financial assumptions after the first four quarters:

The document should have two page of financials reflecting 3-5 years at a high level – a sketch based on shared assumptions:

  • Cash movements on one,
  • P&L on the second.

I recommend an application of funds page after these two

  1. This sets out how you would spend every penny raised in this round
  2. Your assumptions on the outcome of every cost line item
  3. The impact you think each line item will have on shareholder value
  4. Set expectations for a next round value based on a successful application of funds from this round

The prose would be:

  1. The problem defined and its scale investigated.
  2. The solutions available in the market today – an x-y diagram showing hopefully a gap in the market for your solution.
  3. Your solution in detail operationally and how it addressees that gap
  4. Your business model – the detailed process where €X inputs are added to your model and through hard work and alchemy get turned into €Y.
  5. Your unfair advantage – why your team will succeed
    1. Your team’s experience, expertise and connections
    2. Your Intellectual Property if you have any
    3. Your intimacy with key people in the market – customers, channel partners, strategic partners
    4. Your pre-sales or sales commitments if you have them
  6. The vision for the project
    1. How fast and how far will you bring this project
    2. The risks defined in detail and with honesty
    3. The funding plan
    4. The exit plan if there is one
  7. The three pages of financials

That’s my tuppence worth.

I have been thinking about this and talking about it for a long while so I hope these ideas are useful to you and your team.

Best wishes,

Frank H

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