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Ask HN: How to write a business plan for an Internet startup?

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Re: Ask HN: How to write a business plan for an Internet startup?

#41

Post by mattmaroon »

skmurphy wrote: post #36
mattmaroon wrote: post #15

Earlier quoted context omitted.

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

Tech investors don't ask for business plans because they know they're worthless. In fact, they're worse than worthless, they're a possible negative indicator of success. If anything, they've been burned by the companies that did have them. Polished MBAs with great business plans start stuff like Pets.com and GovWorks. Nerds with no business plans start Google.

Re: Ask HN: How to write a business plan for an Internet startup?

#45

Post by Skeletor »

brk wrote: post #35
Skeletor wrote: post #32

Earlier quoted context omitted.

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 a…

What if you rebate the cost of your software to customers for a trial period? Do you think that counts as revenue or as nill?

What if you prepay for a year of office space before the end of your fiscal year to show no profit in a year? Did you make a profit or not? These are different ways to interpret the same numbers.

Re: Ask HN: How to write a business plan for an Internet startup?

#46

Post by Skeletor »

mixmax wrote: post #39
Skeletor wrote: post #32

Earlier quoted context omitted.

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…

If you have an internal planning business plan document and things don't turn out the way you said they would. You should be 100% accountable to yourself, your partners, and your employees about why your projections were wrong.

Re: Ask HN: How to write a business plan for an Internet startup?

#47

Post by supahfly_remix »

gsmaverick wrote: post #33
whyleyc wrote: post #18

I 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.

hmm...I'm not sure Chad Hurley's case is a good example because he had some excellent connections. His father-in-law is Jim Clark of Netscape/SGI fame. I'm sure that helped open doors, and let them be taken more seriously.

Re: Ask HN: How to write a business plan for an Internet startup?

#48

Post by brk »

Skeletor wrote: post #45
brk wrote: post #35

Earlier quoted context omitted.

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 a…

What if you rebate the cost of your software to customers for a trial period? Do you think that counts as revenue or as nill? What if you prepay for a year of office space before the end of your fiscal year to show no profit in a year? Did you make a profit or not? These are different ways to interpret the same numbers.

Try (as much as possible) to stick to GAAP standards and you'll be fine.

Choosing how/when you depreciate certain assets, or if you use a FIFO or LIFO inventory process is all well and good. But you would still have 1 single set of accounting books/data.

I never enjoyed the accounting part of the companies I've started, but I've learned there are things you could do, things you should do and things that you shouldn't do. There is not a whole lot of room for interpretation, especially if you want to try to raise money or sell the company at any point.

Re: Ask HN: How to write a business plan for an Internet startup?

#49

Post by apsurd »

brk wrote: post #35
Skeletor wrote: post #32

Earlier quoted context omitted.

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 a…

Actually there are two types of accounting balance sheet methods so by definition, you should have and it would be better to have 2.

The first is an historical value based balance sheet where you record everything at what they cost you. For example lets say you bought real estate in 1920 for $1k and now its worth $1million. Historically you paid $1k and you can actually write that in, and you'd want to do that to show you "little" money your company makes, for things like taxes and such

The second case is a market value balance sheet where you record the market value of everything. If your company has inventory, you'd list its value at what it's worth, rather than what it cost you to make it. The interesting thing here is inventory is recorded as an asset. So at the end of the year if you have $50million of market value inventory sitting in a warehouse, a balance sheet will show how much money you MADE (even though you have not sold it). This is very good if you want to attract investors/loans and very bad for paying taxes ....

The point is both are legitimate and needed. The market value sheet will obviously produce a more accurate picture, but seeing as how inventory is an asset, there really is no "super accurate" picture, which is why it is important to keep accurate records for different scenarios.

I recommend an oldie but goodie: "Buy low, sell high, , collect early, pay late" - Dick Levin

edit: i realize I am not in disagreement with you, rather just want to highlight what I think for other HN that there is a need for different versions of the same thing, and its quite legal.

Re: Ask HN: How to write a business plan for an Internet startup?

#50

Post by jmackinn »

webwright wrote: post #34
tptacek wrote: post #28

Earlier quoted context omitted.

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 thin…

You do realize that these answers you suggest people should have amount to a business plan?
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