GURUKUL > Writing a Business Plan: Part 2


"These articles were originally published in VentureKatalyst, India’s first e-zine aimed at entrepreneurs, started by Sanjay Anandaram in 1999. He brings two decades of experience as an entrepreneur, corporate executive, venture investor, faculty member, advisor and mentor. As a passionate advocate of entrepreneurship in India, he’s associated with Nasscom, TiE, IIM-Bangalore, and INSEAD business school in driving entrepreneurship. He can be reached at "

Writing a Business Plan: Part 2

Writing a business plan is easy. Writing a clear, concise and fundable plan is not. Investors are not likely to be impressed by gimmicks or by flashy and flaky presentations. If they are, you probably don’t want such investors.

Clarity of thought, understanding of the market and its dynamics, building a competitive advantage are some of the elements that the plan should demonstrate. Usually, savvy investors don’t spend time looking at the financials. They look at the market opportunity, the offering and the team. Vinod Khosla, one of the savviest VCs in Silicon Valley, is on record saying that he spends less than 15% of his time looking at financials.

So having said that, what’s a business plan to look like? Should it be the size of a dictionary or the size of a pamphlet? How should it be structured? While there are no hard and fast rules, it’s usually a good idea to keep a business plan to no more than between 20-25 pages in length. One good way to approach a business plan is to first develop a presentation, then a 2-3 page Executive Summary and finally the business plan. Only when you have clarity regarding the market and the offering can you present it to a few pages. Investors don’t have the time to read a 100 page document to understand what you are trying to sell!
 
In this gurukul, we suggest guidelines for writing a business plan. As mentioned before there are no hard and fast rules, but following the guidelines below will force discipline and ensure focus. All of the following has to be condensed into a 20-25 page document in a clear and precise manner.

Section 1.0 Introduction
 
When was the company formed, and by whom? Where is the company based? What is the vision and mission of the company? Who are the legal counsel and the bankers?
 
Section 2.0 Market Opportunity
 
What is the opportunity/need/problem in the market? Who is experiencing the need? How big is the opportunity? How fast is the opportunity growing?
 
Section 3.0 Offering
 
What is being offered to address the need in the market? What are the different components of the offering?
 
Section 4.0 Competition
 
Why/How is the offering unique? How will it successfully compete against competition? Why will people buy/use the offering as opposed to competition?
 
Section 5.0 Market
 
Who are the customers of this offering? How will they use it? How is the market segmented? How large are these segments? What is the value of this offering to them?
 
Section 6.0 Business Model
 
How will the offering be delivered to customers? What does the delivery chain look like? What is the value proposition across the chain?
 
Section 7.0 Sales/Marketing Plan
 
What will be the company and offering positioning? How will the positioning be achieved? What are the alliances/partnerships that will be established? What are the different modules/components to be sold? What is the sales strategy – direct/indirect? What are the price points?
Section 8.0 Product/Service Development Plan
 
What are the timelines and technologies? What is the strategy for product development?
 
Section 9.0 Road Map
 
Over the next 24 months what will be the sales/marketing objectives? What will be the company objectives? Product development  objectives? What is the exit strategy?
 
Section 10.0 Current Situation
 
What stage is the offering/company in now? Are any customers testing/using the product? How much money has been invested? How many employees are there? What are the milestones ahead? How much money is required? For what purposes will the company use the money? How many employees will be hired?
 
Section 11.0 Financials
 
What is the P&L, B/S, C/F for the next 12-24 months on a monthly basis? What are the quarterly P&L, B/S, C/F for the first 24 months? What are the annual P&L, B/S, C/F for years 3 to 5? When does the company break even in operating terms? What is the organizational structure of the company? How many people are there across functions? In all of these, the most important is the cash-flow statement!
 
Easy? What do you think?