I completely agree with you on every point.
Business Model can be changed. I am in long distance business and when we started with my partner I was saving on everything, doing most of the stuff myself.
All software ( billing system, CSR portal, customer portal ) was written by me in a short time. I made some mistakes at the beginning but I got invaluable experience from that mistakes. And I am always improving the system I was built two and a half years ago.
Thank you for proving my thoughts.
very concise and practical expansion on the anti-business plan philosophy! Thanks
An excellent post as expected. I totally agree with you, since I had the same advice given to me by my partner early on when I was looking for cofounders/advisors. He simply said "why do you need $50k?" "go learn Ruby On Rails and get your startup up and running" it was one of the best advices I ever took. Getting things done the cheapest possible way, and worrying about getting the product in beta first before seeking even seed investment. Thanks.
Thank god for articles like this -- Very helpful
Dharmesh, very good advice. As you know, we see a fair amount of early stage opportunities in the broad IT sector. Adherence to these 4 "tips" is worth more than a detailed business plan in attracting investor's interest. I would add two points: (1) "Have a story" -- a great companion book to this tip is "Presenting to Win" by J Weissman. It provides practical advice on how to tell your story. (2) Spend time really understanding the needs of your customers -- this can be through quick online iterations as in the Web 2.0 world or simply talking to lots of potential customers. Again the time you take to do this is can be more valuable than writing a massive business plan.
Well I appreciate this particular article and it falls within my cycles of plan and the discipline to develop and make good investment.But please I have see the housing problems in Ghana(accra the capital city) and have the capacity to invest into developing estates but I don't have a seed money.
Dharmesh, great tips. Thanks for sharing it with us.
Some of us have great ideas for a business but never get to do it because the thought how one should start it up is so overwhelming. First is having enough money, complete business plan and everything organized before even scratching the surface.
GREAT post. Having a story makes so much sense.
Here is my question thoug, If you are given 5 minutes to pitch your idea then how does one go about doing that?
I am facing this problem with my startup http://www.onista.com Sometimes I face issues describing wha I'm doing, but when I demo then it makes so much sense.
How can one describe startup in just about 5 minutes.
Put these 4 BulletPoints into a 4 Slide PPT and you are done ! easyBusinessPlan
yeah it's a good business plan in itself.
Good advice Dharmesh.
A couple points to include. I've helped over 60 start-ups in the last 10 years, so you start to see patterns.
1. Your ability to share some of the cash burdern makes investors feel more confident in your plan. There's nothing like having your own money be a 'checks and balances'
2. Build something first, ask for money later.
3. I love a good story, but there are two additional components to this...passion and the ability to be an evangelist. Investors want someone who can sell the story to MANY people....eventually you're going to need to sell a bigger story when your cash needs increase. Hopefully the product or service is bigger too :)
Fantastic advice. I have been struggling with my company, second guessing every once in a while as to what the heck am I upto. But then again when I meet someone and explain the concept(story) and feel really good. Still figuring out some of the equity business of how much equity should be given out for Angels especially when u dont know the value of your company.
In raising money for my company I noticed a trend early on, and that was to show our product. It was a working product at the time, but it only had a fraction of the functionality that we were pitching as part of our "story". Each time we were able to show the product to potential investors they had a much easier time grasping our business model.
Great post Dharmesh! My favorite is the last point 4 that talks about small steps. We are doing the same thing with our business, OnCard Marketing, trying to take the grand vision and breaking it up into little executable pieces. I like to call this taking "baby steps" towards the "vision". It's an allusion to one of my favorite movies "What About Bob?" Our goal is to bootstrap effectively by baby-stepping towards the goal, executing on one piece at a time which lets us do one thing right before moving onto the next. Very important advice we got from various entrepreneurs a while back. I would definitely spread this gospel...
Great tips! I like it how they do actually form a semi business plan, or at last the guidelines for thinking about your business. We've tackled the startup business plan a different way, by building PlanHQ www.planHQ.com).
PlanHQ is an online tool that makes business planning quick and flexible and cuts out on the endless text, leaving you with a framework for adding just the important stuff. I'd love to hear what you think!
I need to raise funding for the following project and could do with some assistance in finding a backer. This is my only business proposal and I also have financials. Hate business plans!
After the huge success of a major outdoor music event in 2006 with Status Quo and Tony Christie from which they made a profit of approaching £100,000, our client is now looking for investment to promote a unique new music event in September 2007 entitled Celtic Roots http://www.celticroots.tv
The company has secured the main headline acts that include THE POGUES (Celtic Roots being their only UK concert of 2007) and Irish dance sensation MICHAEL FLATLEY’S Lord of the Dance as well as a compliment of major supports that will include The Hothouse Flowers & Paul Brady. Both headline acts are capable of attracting capacity audiences with MICHAEL FLATLEYS Lord of the Dance achieving 7 consecutive nights at 10,000 seating venues such as Birmingham’s NIA. THE POGUES tour very rarely, but are capable of filling venues such as Manchester’s Evening News Arena.
The company is also promoting and project managing an established community event now in its third year entitled BWF 2007 http://www.burntwoodwakes.co.uk to be held at Burntwood RUFC Staffordshire. It will bring together for one day some of the best tribute acts in the UK including The Bootleg Beatles, The Counterfeit Stones, Talon the Best of Eagles & Bootleg Abba. Ticket prices for this event will be £22.00 and they estimate it will be as big a success as last year, which was headlined by Status Quo producing the company a profit of approaching £100,000.
The company is also in talks with The Northern Racing Group PLC who own eight racecourses around the UK and a feasibility study is now being implemented by their Commercial Development Department to look at the possibility of partnering with our client to run a program of events from June through to September in 2008 at a number of these sites.
The Managing Director has worked in the music industry for over 20 years and started out as a professional musician in 1981. He has recorded and performed internationally with acts such as Wishbone Ash and Mike Oldfield. He also signed a world wide deal with Warner Brothers International in the early nineties and has recorded and produced two successful solo albums. He has extensive business knowledge of the international event market and has negotiated major licensing deals for chart selling projects in Europe, USA & Japan.
Recent years have seen the demand for outdoor events increase around the UK offering the opportunity for more and more people to enjoy that outdoor concert experience. With Celtic Roots the Directors believe they are offering something that is totally unique and different yet family orientated and that they are in a very strong position to exploit this with there being a very large Irish & Scottish community based within the West Midlands.
Marketing and promotion plans include national & regional press, radio and television advertising.
The company has also established its own online ticket domain in the form of http://www.ticketstogo.co.uk that they successfully introduced for the Status Quo concert in August 2006. With this new system they have also eliminated the need to forward tickets by mail or by courier as a special bar-coded email will automatically be sent to the customer. When presented and scanned at the venue, it will be exchanged for event wristbands reducing administration costs on the customer that they normally have to bare. The company will retain several major Internet ticket outlets through brands such as Ticket Master, Ticket Line that also provide a 24-hour telephone hot line.
Hospitality at BWF 2006 sold out within weeks of being announced at £100 plus VAT per head and this year’s venue Beacon Park offers a much bigger. Hospitality for each day will be a cost of around £120 - £140 per head and they have already a number of tables reserved.
The Directors believe they are poised to make an impact on the entertainment industry, giving early investors the potential to participate in the long-term success of this focused and experienced company. For an investment of £400,000 they are offering a return of 30% of all profits generated with a chance to get involved in the development of the brand. Investor involvement is welcomed.
great artical,took some time to sift through all the comments above,but has given me some insight on where i go next.
I am involved in a healthcare software startup. We are researching angel investors with an interest in healthcare software, any thoughts on where to go to find these investors? Also we are preparing our business plan for company start up expenses and revenue streams. Question, do angel investors expect to see full time employees to draw a small base salary through the start up period?
This is a great post! I am helping people get that audience with a site I started so I could get funding for an online business.
It's true, know the fundamentals of how your business will solve problems and/or offer a service whether in the form of a product or otherwise. Reason being is because business plans can change, and they will change probably 99 percent of the time. Think about it, no one plan is written or thoughtout in perfect form, but if you have a realistic concept whereby others can actually grasp the functionality of it then you are more likely to open wallets if the concept is within an investor's scope of interest.
* The nuts and bolts of any business plan is knowing where you will take an idea in meeting a positive end result.
Hey! This is good advice... I'm just past the stage of concept. I got the pattent pending status as well. I launced... and now the real funding is needed. To do sales I need additional funding. How do I convince angels now? What sources do really work for a company like mine!Any one out there!!!
Could use some genuine epxpereice here from any one.
Great discussion about the pros/cons of bplans. As a contrarian, failing to plan means planning to fail, simply put even at a very early seed stage. Having been involved in startups at every stage and every degree of health, my experience says you still need a brief elevator pitch (one to three minutes verbal) and one to three page written executive summary of your plan.Vast financial projections at an early stage will be a futile exercise generally. Your pitch covers you, your product or service, your target market, your business model (how are you going to make money!) and your competitive advantage. Ideally also a SWOT analysis: Strengths, weaknesses, opportunities and threats. A BRIEF ppt and a one-page written summary are essential. If you can't put down on paper what you are attempting to do then what are you doing? It doesn't have to be the Taj Mahal but it should be clear and sharp.
Of course it is not going to be written in stone. A good plan is an operating, living-breathing document.
In early days you will need your pitch and summary for investors and recruits, not to mention beta customers of any size. Also be prepared to have a good understanding of the competition. Don't say "We don't have any." Been there heard that, not true. Even if competition is the horse and buggy and you have invented the car, there are still barriers to entry.
We have a new technology to generate electricity. It uses no carbon-based or radioactive fuels –nor is it one of the “Al Gore Fantasies” such as solar, wind, geothermal, or other unreliable and often very expensive alternatives being pushed by people who have little idea what they’re talking about.
Generation occurs in “plants” as with other systems. The difference is that our system is very “clean” and, in fact, has only two “waste streams”. One is oxygen, which can just be vented or, I would presume, could be captured if there’s a need for it. The other is organic carbon – this, of course, is the best “food” for algae-based biofuel operations so I expect many plants will either add downstream biofuel “farms” or sell the carbon to existing ones. (Much depends on the climate where the plant is located.)
The plants are very safe and would require minimal staff to be on hand – I think that in many cases several plants could be monitored by a central “command center”. In a “worst case scenario” things would just stop – no fires, no explosions, etc. No one in the area has to jump out of bed at 3:00 a.m. and run for dear life.
The “big story” is the cost. A study was conducted which compared fuel costs with a diesel fuel operated plant to serve an imaginary community of 30,000-40,000 homes and contrasted that with costs using our system. Running at full capacity, diesel would be about $30,000.00 a day compared with our system which would be less than $1,000.00. In addition, of course, there are additives and other costs associated with burning diesel and, of course, the environmental concerns. So, unlike many of the many new technologies being promoted, this is the one which not only offers the benefits everyone wants, but also brings significant economies over current systems.
Our plan is to find a “development partner” to fund the essential steps to prove and protect the technology and then we want to license it very inexpensively throughout the world. We also want to use a good part of profits to underwrite a number of local programs to benefit both people and commerce in countries where our technology is being used (housing, clean water, education, etc.)
Every politician of every stripe has been calling for the need to develop new energy technologies, but we never even get a response when we approach them. This is obviously something which should be promoted by government (although we would vastly prefer NOT having government involved). We've just about gone crazy trying to find start-up funding for our patent work, a small "demo unit", promotional materials, etc. Any suggestions?
D. Phillips Wells
The article just suggests startups to get into reality.
Very nice article.