Business Plan : Examples and Best Practices of Business Plan Writing

Uploaded by StartmeUpVideo on 17.02.2011

Hello, my name is Ian Casterton
and welcome to StartMeUp videos
today we're joined by doctor Steven Gedeon
to discuss the proper techniques to business plan writing. Thanks for joining us Steve
My pleasure
Steve you have started over a dozen companies venture capital firms
and nonprofits
Can you tell us about your most recent company
i haven't started over a dozen i've been the CEO, turnaround or started over a dozen
My most recent company um... probably would've been 3DNA we raised
five rounds of financing
five or six rounds of financing
and it's the number one download in our product category for the last year and we grew the
company to over a million in revenues and over twenty employees before
declaring victory and moving. Ian: Congratulation on your success. Steve: Thanks
and you have also started a number of venture capital firms correct ?
yes of the largest would've been are hundred billion million dollars US VS program
based out of san diego
I was also involved with starting a couple of smaller seed venture capital firms as well
so you had both perspectives, You have asked for money as an entrepreneur
and you have spent someone else's money as a venture capitalist. Can you tell us about the different perspectives ?
It really doees give you different perspectives
When it's your baby and you are passionat about it. You don't understand why don't these idiots get it
and then suddenly the next week on the other side of the table going wow why don't these entrepreneurs get it
All I want is a simple answer to this, this and this
and the entrepreneurs just don't get it
so yes it has given me a really intresting perspective on the both buy and sell side of the transactions
and now you teach business plan writing correct ?
that has given me an even bigger
perspective. I thinnk Confucius said something like; to really understand something
you know if you hear something you learn a little bit if you do something
you learn more
but to learn the best you have to teach somebody else something
so it sounds like a business plan is a useful tool for just the entrepreneur
just to get their ideas on paper ? Steve: business plans play a variety of roles. Certainly
a number of business I have started up, we never had a business plan.I have seen a lot of
well written documents saying don't waste of time writing a business plan
certainly for some businesses you shouldn't waste your time just get out there just do it
do it,do it,do it and
why bother write it down on a piece of paper
but business plan certainly play a very key role for certain reasons
so certainly if you're trying to raise financing
and you want to
promote yourself as a credible intelligent entrepreneur or with the well-thought-out
business plan
you know what the money is going to look like, how much you need and why
then people want to see at least something
you should keep it short
i would say very few people will read more than twenty, twenty five pages. That would be
a lot of people won't go beyond the executive summary before they make a decision on it
so there is a lot of different reasons to write a business plan
so i'm an entrepreneur and I just decided, I want to write a business plan
Steve: Good for you Ian: Thank you
What are some strategies that I can get what is in my head right on the paper ?
do I have to think about an outline for everything or should I start right away ?
Good Question
i think that the
writing the business plan itself is not nearly as important as the process by which you think
through what is a successful business
that if you leave if you think through and write through what makes a successful business
and figure out all those things then the business plan will write itself
so when I teach the course for example What I start with is saying
just write down
week two or week three
Just tell me what your idea is
clearly and succinctly what is your idea
and surprisingly that's that's hard for a lot of people that's, they talk around it's
it seems clear in enough in their own mind when they try to put down on a piece of paper
the idea get's burried under too many words
you've got to be able to convey what your idea is in a sentance
maybe two
if you're selling to your mom who loves you maybe three sentances because she will pay attention long enough
but if it's not if you can't clearly articulated
at a paragraph then it's not clear in your own mind
that's that's the first phase of just what is it
and then
second phase i usually go through is i say
tell me in detail who your customer is
and why they care
and very often what'll happen is
as people think about who their customer is
and why they care then they have to go back and change what the original idea was
and so
the idea of being able to really focus on who that customer is
is so important and and and most entrepreners don't get this. What they do is to say
I'm seeling to women
well the problem is you can't sell to women
The thing I like to say to students sometimes is
imagine you started a company
there's a telephone
start making phone calls
you are selling to women
what are you going to do
just pick up the phone call the first person
Hi, are you a woman ?
let me sell at you
You stand on the street corner in a chicken outfit, hey women buy my thing ?!
you have to have in mind a particular woman
doing a particular thing
what is it about that particular individual that makes them
pay attention to your idea, love your idea and buy from you
and and the more you can't focus on and it's segmentation niche marketing kind of
business lingo associate with this
the better you can articulate who that target demographic is
their psychographics what they read where they hang out better you can place your
message in a place where they'll see it
Steve: Does make sense ? Ian: It does, and it sounds like you are detailing a lot about 0:06:15.669,0:06:19.039 the exectuive summary and how that is the more important element of a business plan.
Steve:We haven't written the executive summary yet.
I'm still working through, think through the right business. You can do this on a piece of paper, hand written
and so
let me go through a little bit more some of the kind of a big conceptual blocks that you
need to
fit all together
maybe i'll back up a little bit
the business planning process self
most business planning books seem to say you start beginning and you write through the end
but that's not what you think through business. The way you think through a businesses is you start
you start thinking through a little bit then you realize you got to go back to beginning and start
over again
then you think you little bit more
go back to the beginnig
so you've got the slate clean process to go through before you fine
you've figured out how to make it all came together
now you can start writing a business plan
so the first thing you do is to say you in general terms safely what's the business
and then say cooled by selling to
but in detail not just you know women or you know
people between the ages of twenty five and thirty five
you people of different you got out
honor that's when you're trying to sell your product to them
and so we figured we hear from you
and uh...
figured out how quickly with the price point needs to be as an example
then obviously need lookit career
competitors are
uh... then comes
kind of a quarter business
concept of strategy
how it different
from your competitors
that way that's important your customer
which means you don't know who the competitors are getting the customers are
and yet a hundred different
now the figure that out and put it to go back to rewrite business is all about at any time
we have to go back to rewrite the customers are again sorry at any time in this process
should you be taking breaks to talk to any potential customers the market will tell you
anything you need
but so many people rate these business plans that are castles in the sky dreams
based on
you know it's a billion dollar market side is gonna get a fraction of a percent of the
billion dollar market may act like that means anything
that's not what business is the bill
businesses are built one customer a time
once sale at the time
okay uh... just uh... dual curve ball
uh... as a venture capitalist country with them
hundreds of business plan meanwhile was the most important component or what did you
first look at tearing me if you should keep on reading or
his electrical reports
um i can speak with the story on this matter everybody agrees on this point
person you look at forces the executive summary
of the first thing you look at is really uh...
people bet on the jockey before the fed of course people
that honor eighteen with the big plan over and any plan with the people
so they look at the entrance
uh... they look at the overall business idea
and that damn
right to the financials and that seems like it's the most challenging part of the business
plan ras pickens struggle with the financial thing all the time shannon adaptive
and so many of the business plan but six release declined
step one is estimate the overall size of the market
you know some big crazy large number step to estimate your percentage of it
all i need is one percent
step three
make a random crazy yes
at how to go from zero to that one percents over
specs for your time
and that becomes your top-line revenue number
but but that's that's such fantasy
and again it doesn't honor the reality
of hollow on thurs build a business make once it with time
so as a superficial example you would say
month one popping a put in my financial protectionism i'm gonna make
five hundred cold calls
of those five hundred cold calls a hundred people above the election speak with
of those hundred people tend to go into
be interested
alarming face-to-face with five of them
of those five i'm not gonna close any sales
month too
i'm going to make
three hundred phone calls you know meet with that's number of people and then i'm calling
to make a sale
and also part of those
revenue drivers are why do you make a sale
who wanted to make that sale to there's a big company little company like what part
of my target demographic
how much is that still than before
so no
as a b c when i look at that time thousands eilers instruction arbitrate ten thousand
dollars i can see it hard to come up with that ten thousand
all i see you can make a bunch of phone calls you to meet with people
you can't see why the san francisco open a cd expense that we are very good
on and uh... all i see you not
and you get a filmmaker silverstone
i've been there you're gonna feel glad to be you know that you want to
you can see all the steps of the author is going through
to get to that sale
now that number has some credibility
it's not
you know you throw darted a dart board and month one of my have ten thousand dollars
or even worse you say something stupid like that this is conservative
everybody knows that the numbers that you're putting your business plan are long before
you put
and you'll be believes your numbers
and chances are you getting your numbers right are astronomically zero
but the question is
once you've got my millions of dollars
your six months it
and now the numbers are wrong we all know to be wrong
the question is has the projections giving you a died management action
so that's the real purpose of the financial numbers is does it give you a guide to action
but let's say for example that you say uh... okay
on my spreadsheet first able to do them as they are going to give away
ten thousand brochures
of those ten thousand brochures
we're gonna get a two percent response rate
people go to our website
uh... as result we have a certain number of hits on our website
fall from the number of people come to our website we're gonna conversant percentage
of those two cells
uh... at a certain dollar value
and now what you know
finally revenue number it was is you know
all those numbers add up basically
what comes and goes
your numbers are wrong
question is why what did you feel depicted you give away the right number brochures
yes but we didn't get two percent sponsoring
need we need to change the brochure
didn't change the color of marketing message or who we give them out too
maybe we need to change that
or else they be did percent response rate but didn't get the drive through the web traffic
what can we do to fix that mike
you know maybe once people come to the website they're not buying
if you do something different your website if the price point is wrong but usual guide
to management action as opposed to
what we said would be ten thousand we didn't make ten thousand which we do different
uh... i don't know
tried harder
let's try harder
it up but that doesn't work for you
but have you how do you tell your business plan
for these different audiences
you always have to evaluate your audiences what they want to see and what the call to
action is from them
the call to action
for a brochure
could be anything from
by now call this number
on go to our website began tell people what the called actions
so any chance you specific
question perfect or after the cds is is a different plan and you would write to your
own poorly
which is a different plan that you might right for your bank which is a different plan than
you might right for your phone clarity of thought
are for one of my going to do
to uh... make money off of this venture as opposed to is great ideas motivational pocket
lots of pictures stuff like that
are you getting a lot of questions that
archer's out
out there in the world have i'm sure
uh... thank you very much if you have any other resources needed for now line for business
warning or sources please visit family oppression dot com defense again for joining us trip