Tag Archives: Business Planning

Business Plan Competitions vs. Business Model Contests

No One Wins In Business Plan Competitions

Business Plan Versus Business Models
Where did the idea that startups write business plans come from?  A business plan is the execution document that large companies write when planning product-line extensions where customer, market and product features are known. The plan describes the execution strategy for addressing these “knowns.”  In the early days of venture capital, investors and entrepreneurs were familiar with the format of business plans from large company and adopted it for startups. Without much thought it has been used ever since.

The Alternative – Business Model Competitions
I’ll offer that to be useful for startups Business Plan competitions need to turn into Business Model competitions. A Business Model competition has a radically different goal than writing a business plan.  The Business Model competition measures how well students learn how to Pivot by getting outside the building (not by writing a plan inside one.)

Read the rest here

Don’t forget to keep it simple – Recomended reading from Steve Blank

From Steve Blank’s BLOG post:    Turning on your Reality Distortion Field

Our product is really complicated

After hearing more details about the features of the product (I think he was heading to the level of Quantum electrodynamics) I asked if he could explain to me why I should care. His response was to describe even more features. When I called for a time-out the reaction was one I hear a lot. “Our product is really complicated I need to tell you all about it so you get it.”

I told him I disagreed and pointed out that anyone can make a complicated idea sound complicated. The art is making it sound simple, compelling and inevitable.

Turning on your Reality Distortion Field

The ability to deliver a persuasive elevator pitch and follow it up with a substantive presentation is the difference between a funded entrepreneur and those having coffee complaining that they’re out of cash. It’s a litmus test of how you will behave in front of customers, employees and investors.

30-seconds
The common wisdom is that you need to be able to describe your product/company in 30-seconds. The 30 second elevator pitch is such a common euphemism that people forget its not about the time, it’s about the impact and the objective.  The goal is not to pack in every technical detail about the product. You don’t even need to mention the product. The objective is to get the listener to stop whatever they had planned to do next and instead say, “Tell me more.”

How do you put together a 30-second pitch?

Envision how the world will be different five years after people started using your product. Tell me. Explain to me why it’s a logical conclusion. Quickly show me that it’s possible. And do this in less than 100 words.

The CEOs reaction over his half- finished muffin was, “An elevator pitch is hype. I’m not a sales guy I’m an engineer.”

The reality is that if you are going to be a founding CEO, investors want to understand that you have a vision big enough to address a major opportunity and an investment. Potential employees need to understand your vision of the future to decide whether against all other choices they will join you. Customers need to stop being satisfied with the status quo and queue up for whatever you are going to deliver. Your elevator pitch is a proxy for all of these things.

While my ex student had been describing the detailed architecture of middleware of electric vehicles I realized what I wanted to understand was how this company was going to change the world.

All he had to say was, “The electric vehicle business is like the automobile business in 1898.  We’re on the cusp of a major transformation. If you believe electric vehicles are going to have a significant share of the truck business in 10 years, we are going to be on the right side of the fault zone.  The heart of these vehicles will be a powertrain controller and propulsion system. We’ve designed, built and installed them. Every electric truck will have to have a product like ours.”

75 words.

That would have been enough to have me say, “Tell me more.”

Lessons Learned

  • Complex products need a simple summary
  • Tell me why I should quit my job to join you
  • Tell me why I should invest in you rather than the line outside my door
  • Tell me why I should buy from you rather than the existing suppliers
  • Do it in 100 words or less.

Upstart Advisors – website & BLOG

This blog is for you, whether you are dreaming of starting a business, getting your new company off the ground, looking to raise capital, or just making sure your startup is on the right track. You’ll find topics like: What’s in a business plan, how to determine whether you’ve got a good idea for a business, and how to think about financing your venture. You’ll see that my approach favors speed and flexibility – a combination I find practical for today’s environment. You’ll also find me saying that the most important aspect of business planning is the thinking behind the plan.  Need some help? Click here to learn how UpStart Advisors can help you launch your venture.

Read the BLOG here

Pulling numbers out of the air

No, You Can’t Just Pull Numbers Out of The Air

Question: I’m in the process of writing an Internet startup business plan to present to prospective investors. The site isn’t live so I don’t even have a basis for speculation with respect to the financials. I would essentially be pulling numbers out of the air. Being that the Internet business as it pertains to advertising revenues is so mercurial, is it feasible to present the plan without having the financials included? If not, how can I make more realistic financial assumptions?

My answer: No, you won’t get anywhere presenting a plan to investors without financials. I’m glad you asked me instead of just moving ahead with that idea.

Every new business, including website business as well, has to be able to present a reasonable forecast if it’s going to hope to get an approval from outside business. And it can never be “pulling numbers out of the air.” The assumption is that before you start a new business you have some idea how it’s going to work, based on some experience. If you have no idea, no investor wants to even share the same elevator with you.

In this case, the website business, you need somebody on your team who can project website traffic and sales based on real experience with search terms, search engine optimization, Google ad words and its competitors, conversion rates, and so on. Your traffic doesn’t get pulled out of the air, it’s a function of what you plan to do and what you plan to spend. Know your key search words and the traffic those words and phrases get for others, right now. Know reasonable conversion rates. Make estimates based on real assumptions about real variables.

For more information on this, you could try:

Life plan before a business plan

Life plan before a business plan

To really get a good picture of your life plan as an entrepreneur, answer the following questions:

  • What kind of lifestyle do you want to have as an entrepreneur?
  • How big do you want your business to get in terms of profits and staff?
  • Will you have employees?
  • How many hours a week will you work?
  • Do you need to meet the school bus every day or take off every Friday?
  • Are you willing to work seven days a week? If so, how long can you keep that up?
  • Will you need a partner and could you handle working with one?
  • How will you fund your household while you start your business?

You may have a great business idea, but you must decide if it’s a good business for you and your family.  Do not trade a soul-sapping job for a business that you hate.   With a life plan you will have a goal, then you can develop a plan that will lead to personal and professional success.

Before You Write a Business Plan

Look. Thinking through your business start-up is essential. But there are some steps you should take before you sit down to write your business plan. And in some (many?) cases the business planning process just interferes with the essential “real-world-proof-of-concept” step.

From Tim Berry’s free “Plan as You Go” book and website.

Before You Write a Business Plan

Validating the idea and understanding the business model are pretty important steps that should come before writing a business plan. That’s hardly a novel idea.

Still, novel idea or not, successful entrepreneur Vivek Wadhwa spells out the early stages very well in a BusinessWeek special report published in early 2008, “Before You Write a Business Plan.”

He starts with a short list for validating the idea:

  1. Write down your thoughts on the product you want to build and the needs you want to solve. You’ll be detailing your hypotheses.
  2. Validate these hypotheses with as many potential customers as you can. Ask them if they will buy your product or service if you build it. Learn about what features they need and what they will pay for, ask them for more ideas, and be sure that there is a large enough market.
  3. Build a prototype of your product or offer a test run of your service and again ask potential customers what they think about it. You’ll find that customers usually provide much better input when they can actually try out a product.

Then Wadhwa also suggests a slightly longer list for developing the business model, by answering s a series of questions. …

To read the entire article click here

The Value of Cold-Shower-Self-Honesty

The Danger of Entrepreneurial Passion

5:34 PM Wednesday January 6, 2010
by Daniel Isenberg

Passion is up there with innovation in what people think entrepreneurs need in order to succeed. I doubt it. My experience as entrepreneur, entrepreneur educator, and venture capitalist tells me that the more scarce and valuable commodity is cold-shower-self-honesty. Sure, it takes huge commitment, energy, and stamina to get a new venture off the ground. And of course you have to believe, sometimes with little data, that you can succeed against the odds. But passion is an emotion that blinds you.

Mixing the oil of self-belief with the water of dispassionate assessment is probably the entrepreneur’s toughest task. Here are some guidelines: (more)