Big Red Car here. Ahh, the ATX, it’s lovely to live in paradise. The Boss is back, so finally it’s back to writing regularly. Hey, Boss, nice to have you back.
So The Boss is involved with Techstars Austin as a Mentor and meets all the teams on Mentor Day or some such thing. Very impressive folks and startups.
One of the young studettes asks The Boss about the necessity to plan the company’s future and he responds with his Vision, Mission, Strategy, Tactics, Objectives, Values, and Culture shtick. And then she asks the Big Question — how did y’all used to do this stuff back in the day?
It’s called the Tactical Business Plan or simply the Business Plan.
You did not invent business planning or sex
Bad news — the startup ecosystem did not invent either sex or tactical business planning.
Back in the day, business plans used to be made in long hand rather than shorthand. There is nothing wrong with abbreviated planning while an entrepreneur, founder focuses on the hypothesis or the idea or the product. Nothing wrong at all. Arguably this can carry you through seed funding (bootstrapping, friends & family, angels, syndicated angels >>>>> seed funding might be the way you see it through).
When it finally comes to building the business, you are going to need a more detailed plan. Not just because you will need a plan around which to coalesce and align the team and to raise money but because you actually have to have a detailed plan to actually RUN the business. At the end of the day, the most important thing — once you have the product market fit and a few customers — is to RUN the damn business. Always remember to RUN the business.
Give me a hint, Big Red Car, what does it look like? Please?
A good Business Plan is just an orderly expression of a lot of important issues organized in some coherent manner which allows others to see your Vision and Mission and Strategy converted into a rational, logical, coherent, organized plan which is typically presented in some temporal progression.
While there is no “gold standard”, there is an outline which can be useful. Really, like any checklist, if you can get the outline headings right, you can make the Business Plan in your own authentic voice.
Here is an outline The Boss has used for years — initially just the headings. It is updated to anticipate that your business is going to be web based and technology driven even if the only technology is the website.
Internet Strategy, Implementation
Once you have agreed on the big subdivisions — there is no ironclad necessity for them to look like the above, make it work for you and customize it — The Boss likes to fill in the blanks with numbered headings and subheadings. Something like this:
1. Executive Summary
1.1 Executive summary
1.4 Keys to success
1.5 Use of proceeds
1.6 Ownership post funding (if seeking funding)
2. Company Summary
2.2 Company history
2.3 Ownership (cap table)
2.4 Legal entity description
2.5 Company locations
3. Products, Services
3.1 Product description
3.2 Service description
3.3 Prototype, working model, website
3.4 Unique selling advantages, competitive advantages
3.5 Competitive products, services
3.6 Comparison of products, services v competitive products, services
4.0 Market Analysis
4.1 Market description
4.2 Market segmentation
4.3 Targeted market segment
4.4 Market trends, growth
4.5 Market buying pattern, sales process
4.7 Competitor’s historic trends
4.8 Market communication channels (web based in particular)
5.0 Strategy, Implementation
5.1 Value proposition, pain point, problem being solved
5.2 Competitive advantages being delivered (duplicated above)
5.3 Positioning statement
5.4 Pricing strategy
5.5 Promotion strategy (using market communication channels noted above)
5.6 Marketing program
5.7 Sales strategy
5.8 Sales tools
5.9 Sales forecast
5.10 Sales force, staffing, supervision
5.11 Sales force compensation, incentive compensation
5.12 Critical sales benchmarks and milestones
5.13 Sales reporting
6.0 Technology Employed
6.1 Technology being sold, if any
6.2 Technology employed in delivering product (website, etc)
6.3 Shelf life of technology
6.4 Critical technology personnel in organization
6.5 Proprietary technology
7.0 Internet Strategy, Implementation
7.1 Web presence
7.2 Social media strategy, presence
7.3 Analytics (feedback)
8.0 Critical Skills
8.1 Top management skills
8.2 Critical skills baked into the product, service
8.3 Critical marketing skills (including sales)
8.4 Critical technology skills
8.5 Critical skills currently missing within the organization
9.0 Strategic Alliances
9.1 Strategic alliances current
9.2 Strategic alliances future
9.3 Strategic alliances currently missing within organization
10. Management Plan
10.1 Organization chart functional
10.2 Organization chart by person (dollar weighted also)
10.3 Projected growth of organization
10.4 Missing management skills
10.5 Personnel plan including compensation
10.6 Compensation table including salary, benefits, short term incentive comp, long term incentive comp, something special
10.7 Comparison with competition
10.8 Management philosophy
10.9 Internal management communication plan
11. Financial plan
11.1 Current funding
11.2 Cash on hand and runway
11.4 Break even analysis
11.5 Projected income statement, balance sheet, statement of cash flows
11.6 Current and project business ratios
11.8 Projected valuations
12.2 Assignment of responsibility
12.3 Employment practices (by reference)
12.4 Culture talismans
12.5 Culture celebrations
13.2 Founder discussion of preceding
14.1 Statement as to confidentiality, proprietary information, trade secrets
14.2 NDA – nondisclosure agreement
14.3 Business process graphic
14.4 Business model canvas
14.5 Company dashboard
The above is intended solely as an outline but it is an outline which will provide a fairly comprehensive view of a business’s plans for the future and thereby indicate its likelihood for success while providing a yardstick against which to plot and evaluate progress. To be useful, it must be briefed, reviewed and updated at regular intervals.
Do use words, tables, spreadsheets, graphs and other means to communicate. This is a tailor made situation for presentation creativity and depth. Use tables, spreadsheets, graphs.
Some of the topics are important to a startup which has evolved into a real company — dashboard is an example.
Take a look at this and tailor it to YOUR needs. Don’t be afraid to take a few months to write it, brief it, implement it and use it. Don’t be afraid to abandon certain aspects but know this — the tactical business plan — is what you must do when you finally grow up. Sorry.