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Ask HN: How to write a business plan for an Internet startup?
31–40 of 54 posts
Re: Ask HN: How to write a business plan for an Internet startup?
#32I've written more business plans than I care to think about. This is my experience: 1) A business plan is a marketing document. Usually you are using it to sell your business to banks, investors or partners. You have to think of your audience when you write it. An investor likes to see projected revenues that are high and don't mind that there's a risk - banks are the other way around. 2) Don't use business plans as…
I don't like your statement about a business plan not being a plan to run your company, that is exactly what it should be. Though maybe your 1 page strategy document is your real business plan.
The business plan is just a name though, you should have 2 sets of books/plans:
1) Internal accounting that is very pessimistic and realistic and assumes the worst case scenario and prepares for it.
2) External accounting that is incredibly optimistic and assumes every possible best break will happen 100% of the time.
Re: Ask HN: How to write a business plan for an Internet startup?
#33I wonder if Chad and Steve from YouTube had a business plan, or Craig Newmark, or Steve Jobs ? Don't write a business plan. Instead spend the time you would have spent on the plan putting together a kickass demo, or working on the product. Having been approached, you're operating from a position of strength already. You should work that to your advantage - if you don't need the money then you can afford to negotiate…
Chad said at a dinner that when he and Steve made the rounds on Sand Hill road, they had a working product, and users to prove their idea was good. They didn't bring a business plan or any fancy presentations.
Re: Ask HN: How to write a business plan for an Internet startup?
#34Earlier quoted context omitted.
+1 We talked to about 20 investing entities (maybe 5 or 6 VC firms, a mess of angels, and a few angel groups). Exactly 1 asked for a business plan and they were the lowest quality entity with the least success/experience. Fred Wilson (one of the top consumer VCs in the world) said that 17 out of 26 of his "successful" investments (with exits) utterly changed their business model between investment and exit. In other…
What are the top 3 things you'd want to have handy in Excel when you sat down to a second meeting with a strong-sounding investor, webwright?
I didn't have any spreadsheets handy, but I think the best spreadsheet you could have would be growth/traction data rather than prognostication. Without _some_ traction (or a gold plated team), I think fundraising for web startups is a waste of time for the most part. I think the data you should have at your fingertips varies wildly based on what biz you're in and how mature your business is, but off the cuff, I think you should be able to answer (with some supporting wag numbers):
- How are you going to make money? What if that revenue model doesn't bear fruit... any other ideas?
- How are you going to reach your customers? How much will it cost to reach your customers?
- Roughly, how big is your market? Is there a lot of demand?
- How big a team do you need to test your initial theories and roughly how expensive is that going to be?
- Are there any other significant expenses aside from people?
- How many sales/pageviews/whatever would it take for you to be cash flow positive?
I don't good investors ask these questions to test your planning powers... I think they ask them to test how smart you are and how much you've thought about this stuff.
Re: Ask HN: How to write a business plan for an Internet startup?
#35I've written more business plans than I care to think about. This is my experience: 1) A business plan is a marketing document. Usually you are using it to sell your business to banks, investors or partners. You have to think of your audience when you write it. An investor likes to see projected revenues that are high and don't mind that there's a risk - banks are the other way around. 2) Don't use business plans as…
I don't like your statement about a business plan not being a plan to run your company, that is exactly what it should be. Though maybe your 1 page strategy document is your real business plan. The business plan is just a name though, you should have 2 sets of books/plans: 1) Internal accounting that is very pessimistic and realistic and assumes the worst case scenario and prepares for it. 2) External accounting that…
I'm not sure if this is what you were saying, but you should NEVER have 2 sets of actual accounting books. The numbers are the numbers, the truth is the truth.
You can create and present a document that shows your expectations and assumptions, but you can't say you made X amount of sales and Y amount of profit when the real numbers are different.
In reality though, the data you show and present should be realistic and perhaps slightly cautious. This is what you are going to be measured against. Being "incredibly optimistic" when you do not believe this to be true is really kind of fraudulent.
Set expectations for what can reasonably happen with the resources/constraints you are working with. Internally, manage your capital as if it were your last dollar. If you do not meet the expectations set, determine why.
Re: Ask HN: How to write a business plan for an Internet startup?
#36Earlier quoted context omitted.
The purpose of a business plan is to show that you've given some thought to how you'll run and grow the business. Anyone who thinks that's an exercise in futility will have a hard time getting funding. If you have an idiot investor, sure they might be pissed at you because of missed quotas, but you can also use them to look at your cash flow. If miss my Q4 quota by 30%, does that cause me to go bankrupt in Q2 this ye…
The purpose of part of the business plan is to show that you've given thought. A business plan is basically a collection of things that are pretty smart to think about and write down, plus a whole bunch of other crap you pulled out of your ass to try to impress investors. Smart investors have their own ass from which to pull numbers. I know lots of people who got funding with no business plan, in fact few tech compan…
"I know lots of people who got funding with no business plan"
I don't dispute your experience but would caution that 2005-2008 may not be a guide for 2009-2012
Re: Ask HN: How to write a business plan for an Internet startup?
#37TicketStumbler is my third business and the closest thing I've ever done to a business plan is the YC application form. Know what problem you're solving, why you're solving it, who has this problem, how you're going to solve it and (maybe) monetization options.
I think a business plan could be important if you're looking to take gobs of money, but your query makes it sound like the investors are angels. Maybe providing more details would help everyone provide further feedback?
Re: Ask HN: How to write a business plan for an Internet startup?
#38I've written more business plans than I care to think about. This is my experience: 1) A business plan is a marketing document. Usually you are using it to sell your business to banks, investors or partners. You have to think of your audience when you write it. An investor likes to see projected revenues that are high and don't mind that there's a risk - banks are the other way around. 2) Don't use business plans as…
Do you have any stories about how any of those business plans helped companies you were working on? I'd love to hear some.
They helped get funding for two companies I started :-)
I've found that it's really hard to write business plans for other people, and for companies you aren't directly involved in. It's probably a bit like when biz types ask a programmer to write what it says in their business plan - they haven't really thought about a lot of the underlying assumptions and how much work it is to do right. It works the other way around too.
I just wrote a somewhat related blogentry here: http://www.maximise.dk/blog/2009/01/business-plans-for-hacke...
Re: Ask HN: How to write a business plan for an Internet startup?
#39I've written more business plans than I care to think about. This is my experience: 1) A business plan is a marketing document. Usually you are using it to sell your business to banks, investors or partners. You have to think of your audience when you write it. An investor likes to see projected revenues that are high and don't mind that there's a risk - banks are the other way around. 2) Don't use business plans as…
I don't like your statement about a business plan not being a plan to run your company, that is exactly what it should be. Though maybe your 1 page strategy document is your real business plan. The business plan is just a name though, you should have 2 sets of books/plans: 1) Internal accounting that is very pessimistic and realistic and assumes the worst case scenario and prepares for it. 2) External accounting that…
In theory I agree with you - but in practise I don't.
There are a number of reasons why business plans don't seem to work as a plan to run the company.
- The business plan of many companies tends to be a stale document that never gets rewritten, and gets more and more out of whack with reality until it is completely obsolete.
- If there are many stakeholders (investors, founders, banks, partners. etc.) they will all need to give their consent whenever changes are made. This easily turns into political hell with you in the middle.
- The more specific you are in your businessplan the more it will come back to haunt you. If you wrote it and it turns out not to be the way you said it's your falut.
- Nobody actually reads updates to business plans, thus rendering them unusable.
Some of these can of course be remedied, but it's a lot of hard work. And maybe that effort is better used building a product or getting customers.
Re: Ask HN: How to write a business plan for an Internet startup?
#40Good business plans are tough. I was taught at Northwestern by a very successful entrepreneur how to build the presentation, business plan, and financial model. You need to cover the basics. Here's what my last one covered: - Executive Summary - Project Information - Company Description - Market and Industry Analysis - Marketing and Sales - Operations - Management - Capitalization and Structure - Development and Mile…
Has a 30 page business plan ever directly helped a company you worked on? I'm not challenging you, I'm genuinely interested.
It helps get money, period. I organize things via basecamp and wikis, not by a business plan.
Business plans are a VC marketing tool for me.