What are the best business planning frameworks for a start-up?
Answers
To be realistic . . . begin with a projected budget with separate, but interactive worksheets for assumptions, capital costs, salaries, job descriptions, burden by month for pre operation for 12 months and then by month for the next 12 months; quarterly for the next three years. Once you have this done you can begin to write your plan, remembering if you have no plan, "any road will take you there".
Bob Morgan
www.Strongbear.com
Since many confuse/merge strategy and business planning...the former being creative/unstructured and the latter being structured, it is important to distinguish between strategy(concerned with what/which/why) and planning(concerned with how/when). The budget is integral to the planning process, both reflecting and constraining the initiatives in relationship to resources, available and required.
Without strategic clarity, however, as Bob Morgan suggests, you may find yourself on the road to who knows where. That said, the strategic framework that we have found most effective in working with scores of enterprises throughout the world, starts and proceeds sequentially: strategy: business focus, value proposition, business model, place and
In sum, the best framework combines startup vision/ambition, strategy specialist's expertise/objectivity/perspective, and robust financial model.
This is a short question that can generate long answers depending on the meaning of planning and stage of start-up. The answers so far are focused on financial planning for what I imagine to be an established business without big company resources. Rightly or wrongly, when I hear someone talking about starting up a business with a new product, idea or service, the key thing is justifying the decision to enter the business, and the techniques discussed above establish ways and means of identifying possible outcomes, resource needs, measuring results and achievement of defined objectives.
None of this addresses the issue of whether or not it is a good plan to actually start up the business, and given that statistics report more than 50% of start-ups go out of business within the first three years, this should be the first area of focus. Business planning to address this start-up decision should include comparative market research and evaluation vs competitive solutions, pricing and demand studies to establish and measure the market opportunity, and validation of the demand and price point by independent third parties currently engaged in the market as prospective customers. Only when the start up business can be validated should we move onto the financial planning aspects.
Great advice provided above. If you are a tech startup the rate of failure is even higher, closer to 95%, so my advice is framework aside, do you have the right team? In the tech startup world it’s team first, then product/market. Team is everything- make sure you have the right team before going down any path.
For start-ups and most SMB's, a good business plan includes a fully formulated executive summary, a projected time-line for major milestones and goals and (at least for a start-up) an 18 month budget/proforma P/L. For existing companies a rolling budget with actual and projected P/L.
Anything more is a waste of time, anything less and you have nothing to gauge your business against.
Most important in the executive summary is to answer the question "What business are we really in?".
Agreeing with everyone, largely tailgating on Wayne....
What he said; and you should summarize (pie charts are nice) major "use of funds" blocks leading to the major milestones.
The detail should be complete, but keep the assumptions large. Line item detail for telephone usage for employees that don't exist yet may be a distraction to you and any user.
Echoing Stephen, Simon et al and merging this with Wayne's: the major milestones should be the proof points of either viability or of strategic traction. Examples: can I manufacture that widget for $1.17 as planned? Will target company A place a first order for my widget displacing others (or opening an entirely new market)?
SBA site has a good framework and if you're considering an SBA loan at some point then it's a good idea to follow those guidelines and even visit with bankers to have the "troubleshoot" your proposal. Free help available too:
http://www.sba.gov/category/navigation-structure/starting-managing-business/starting-business/writing-business-plan
And remember planning is great, but "action is the key"!
Mollie Mossman,
Licensed Commercial Real Estate Broker (Texas)
I am a big fan of the books by the folks at 37Signals. They have a very refreshing approach of finding and refining a very specific customer need.
Having been in several start-ups, I've experienced both the hit and miss of client need, I find that anything that provides a perspective to make sure you hit the client need - it's worth a read.
www.37signals.com
As for how to present, Guy Kawasaki's "Art of the Start" has his great "10-20-30" rule of presenting to investors.
Good luck in your ventures!
Mark
If you are looking for templates, I second the motion on Mollie regarding the SBA website. Another website that provides templates and is affiliated with SBA is SCORE.
http://www.score.org/resources/business-plans-financial-statements-template-gallery
Finally, Microsoft Office has some templates that may duplicate some of the above at:
http://office.microsoft.com/en-us/templates/CT010357400.aspx?tl=2#ai:TC001017520
As the other commentators have indicated, a business plan document consists of two components: prose that presents the strategic aspects concerning the typical functions of any business (sales and marketing, production of goods/services and administration such as finance, IT,
Long gone are the days of planning a business via a brick and mortar "business plan". Today, most advanced start ups employ a 'lean' methodology to building their concept into a business. The most important facet at the beginning is proving your assumption are indeed correct. Thankfully, employing the tools that exist today will help you get that answer faster than you think. Key question you need to answer: do your customers have a big enough pain? Will your solution solve that pain? How long will it take you to realize you need to pivot your offering to meet that need? Read up on http://theleanstartup.com/ . In a nutshell, to test your assumption follow this process of a proving a Minimum Viable Product will work for your clients:
1. Build a landing page with a problem statement and three unique value propositions
2. Build a list of target clients
3. Point your clients to your landing page and get them to signup
4. Manage the communication process and get as much info about the pain from them
5. Ask your clients how much they would pay for what you have to offer.
If enough clients do not leave at any of the above points, you may have something worth elaborating on via the aforementioned financial modeling tools.
It's pretty simple actually. Let your audience/target decide whether or not to pursue the billion dollar idea. If enough say 'great let me know when you have that widget cuz i really need it', then solicit the expert advisers on this thread to help you strategize and build a bullet proof growth plan.
Good luck!
Great points made. I will only add that it is important for a startup to have a board of advisors with the experience and skills sets that will help avoid mistakes and more effectively get to market. Putting the advisory team together should be high priority for any start up.