StartupAvenues

Meet any entrepreneurs or would be entrepreneurs and business plan is going to be the biggest sore point. You mention the term and geek god will go purple! And probably writing business plan seems more complicated than generating the million dollar idea!!

Hence these leads to a scenario where the entrepreneur in making suddenly find himself with a big stumbling block and start looking around and probably that is the start of journey towards confusion.

StartupAvenues (SA) started to look around and came across various websites, books and tools which offer good advice and support to anybody who is trying to write a business plan but are they catering to VCs or they are talking of the usual business plan creation scenario which is done in a general corporate setup!!

Hence after going through various business plans, and talking to many venture capital analysts, partners and associates, we will take you through a general business plan writing exercise which is aimed at venture funds / angel investors.

For a sample we will take business plan format as given on Sequoia Capital website as this plan presents what a VC expect the entrepreneurs to present to him. Here a important point to note is that business plan is not for VC it is for yourself as it forces you to ask certain questions which you might not be addressing at all whiling building blocks of your idea.

basic format of the business plan :

Company Purpose
• Define the company/business in a single declarative sentence.
Problem
• Describe the pain of the customer (or the customer’s customer).
• Outline how the customer addresses the issue today.
Solution
• Demonstrate your company’s value proposition to make the customer’s life better.
• Show where your product physically sits.
• Provide use cases.
Why Now
• Set-up the historical evolution of your category.
• Define recent trends that make your solution possible.
Market Size
• Identify/profile the customer you cater to.
• Calculate the TAM (top down), SAM (bottoms up) and SOM.
Competition
• List competitors
• List competitive advantages
Product
• Product line-up (form factor, functionality, features, architecture, intellectual property).
• Development roadmap.
Business Model
• Revenue model
• Pricing
• Average account size and/or lifetime value
• Sales & distribution model
• Customer/pipeline list
Team
• Founders & Management
• Board of Directors/Board of Advisors
Financials
• P&L
• Balance sheet
• Cash flow
• Cap table
• The deal

In next series we will discuss what a VC expects you to provide in a business plan and elaborate above mentioned points as well most common mistakes in business plans.

Alo read “Business Plan Essentials part II: Writing Mission, Vision“.