How to write a business plan - my thoughts...

Currently I have a Microsoft Word template for building my business plan, which is a combination of a number of things - my experience from new product development at my current employer; my readings on the matter; and some additional thoughts about how I can build in my thinking into my business plan.

The basic structure is as follows:-

Executive Summary


The Opportunity - The situation, the idea, how it works and the key benefits to the user


Strategy - objectives & mission; product strategy; marketing strategy; distribution strategy; financial & risk management strategy; strategic alliances; dashboards


Company Information - location; objectives & mission; ownership; start-up funding; legal (including Intellectual Property); Company KPI's


Product - product objectives & strategy; product description; competitors; technical solution; npd opportunities; competitive advantage; product KPI's; product budget


Marketing - marketing strategy & objectives; market information; market trends & consumption patterns; consumer identification & segmentation; consumer insight; brand definition & essence wheel; price positioning; advertising & promotional activity; new & expanding market opportunities; marketing KPI's; marketing budget


Distribution - distribution objectives & strategy; routes to consumer; distribution structure & segmentation analysis; distribution insights; number of distribution points & share; distribution marketing & communication; distribution pricing positioning & strategy; distribution KPI's; distribution budget


Strategic Alliances & Corporate Affairs - corporate affairs objectives & strategy; stakeholder mapping; stakeholder management; corporate affairs KPI's; corporate affairs budget


Financial & Risk Management - financial & risk management objectives & strategy; proposed business model; finance KPI's; projected profit / loss and balance sheet; key ratios; cash collection & bad debt; overall risk identification & mitigation plan; risk KPI's; finance & risk management KPI's


People - people objective & strategy; management structure; organisational structure; role profiles; cultural values; policies; people KPI's; people budget


Appendix - all relevant background documents referred to above



I have also developed a summary business plan which really just outlines the opportunity, the financial modelling, KPI's and key next steps. This I am envisaging will help gauge attractiveness of the idea by key stakeholders, before I put too much work into the main business plan.



One other thing I've developed along side either of these two documents is a non-disclosure agreement, to enable the discussion of key pertinent facts with friends and potential investors and still protect your intellectual property.

Over and above these documents, I still have to develop my pitch to potential investors.

Its not what you know...

Without sounding too much like Donald Rumsfeld, I know what I know and I know what I don't know, but I don't know what I don't know. And the specific topic in this instance is "how to get capital into my business idea?".

I know that I will need a strong business case. And I know what I think is "strong" but what is "strong"? Are the measures & details of "strong" universal? Do some VC's want to see detailed research or are others interested in the idea first & foremost.

I know I will need to find a "venture capitalist" of some kind and I know I don't know any directly. I also know they are not listed in the Yellow Pages under VC, Capitalists or Dragons Den. I also know I will not be going on the Dragons Den programme... its definitely not for me - too much publicity, and to be frank, not enough money for the type of thing I want to do (£500k wouldn't even touch the sides over the next 3 years!).

So where to begin my search... the only place I can - my contacts! I've been thinking about who I know and how could they possibly get me in touch with an experienced Venture Capitalist, and hope that the six degrees of separation will work for me.

I have a number of contacts I think will be good for me...

• My dad - he has a number of drinking buddies who are of very high net worth and work in The City. They might not be interested but they might know somebody that is...
• My cousin, Derek - he works in The City in M&A, so again he might know people, that know people.
• My old school friend, Scott - he works in Private Banking so will either be able to refer me to his bank's specific department or perhaps a person of high net worth that might have the interest, cash & skills to support this venture.
• My old university American Football chums - one of them is a stockbroker, so again he might know somebody; another works in a University commercialisation team and is therefore in touch with VC's constantly - thing is he's based outside of the UK!
• An old colleague - his dad is completely minted and might be able to help either with the cash or at least in the start up
• A friend's girlfriend - is a strong businesswoman, and has a high net worth. Again she may be an investor or point me in the direction of an investor
• A friend who's a patent attorney - he may know VC's through his day job, or at least companies who might be interested in supporting this type of venture.
  

So, at least that's a start, but before I get started with getting the begging bowl out, I still have to answer the question about building a strong business case.

WIIFM?

Number 1 - Cash

I feel embarrassed to admit it, but the main reason for me even thinking about starting my own business is for the cash. I'm sitting writing this in my rented studio flat, down to my last few pounds for the month and unsure about the future. I have a good job with a steady pay packet, of which it is WAY above average, but I am frustrated with my current lifestyle. How could I make my lilfestyle better? I've missed out on the property boom and struggle to be able to afford a house where I want to live. I could continue to delude myself that it will all be solved with me winning the lottery (I know its a tax on hope and a tax on the statistically inept but I still dream). I know... I know...

I could probably make me life better with some money saving or moving out of central London, I could just sit safe and continue to reap the monthly rewards from my work and slowly & steadily make my life better.

But I think this idea is worth the risk. I can take the risk and make a sizeable change to my life both in terms of lifestyle but also in terms of self-actualisation. In other words, I get excited about thinking about the money, and what it could bring for me and I also know its not the be all and end all of life...

Number 2 - Legacy
Money is not the only thing... I'd like to feel I left something positive in the world. To feel that my contribution to the world has helped people with their lives and both my ideas, I think, will offer that.

Number 3 - Challenge
And I love the thought of even attempting it. I know its audacious, and that really excites me. I sometimes think "God! Why am I even thinking of trying this? This is something a big organisation should attempt, not just me as a one man band! Am I crazy?". And I love the thought of seeing this through and bring to life something that is globally massive.

Number 4 - Destiny
This is a bit pompous but it is nevertheless real. Ever since I was a wee boy, I've always wanted to run my own business, just like my dad. At one stage I thought I would work with my dad, and I like the thought that on this project I will work with my dad. Its been my dream through school about what I would do, that I would have my own business, and it influenced my choice at University to study Management Studies. I have lived and dreamed of my own business for as long as I can remember.

Number 5 - Creativity
I like the feeling, as I've said above, that I am bringing something to life. Something that previously did not exist and something that is purely and utterly down to me. I would bet its similar to how parents feel

Setting sail on the journey...

I write the following to help me better understand what the next stage in my life will be & to help me understand when I am in the thick of it how I felt & what I was thinking.

I feel I am embarking on a voyage. The voyage has no absolute defined destination. I think I know where I am heading for, but all I really know is I'm getting my boat in order, filling it with the right suplies & then just setting off.

I have perversly become more comfortable the less I try to work out where it will take me. That seems so bizarre for me, but it is a hugely relieving position to be in.

I will need to rely on my wits. I will ned to rely on dealing & acting with ambiguity. I will need to constantly pull myself away from the detail, see the abstact and at the horizon to see where my voyage is going.

I enjoy the possibilities that this voyage opens up. If it works or if it fails, if I circumnavigate my globe or if I fall overboard just as I leave the harbour, the possibilities are greater, more exciting than they are now. That is a tremendously confident place to be.

I will not be able to predict all that comes before me. There will be storms, some caused by myself & some by others where I will have to reef up & take the battering. I will have to let go sometimes in order for me to get through the storms. There will be times where I will be in the doldrums where nothing seems to move. I will need to become comfortable & relaxed in my incapacities, using this time to build my capabilities & repair my ship. And I know there will be fair weather, the wind will shift & it will at times be at my back. These are the circumstances that will come to define what my possibilites can be.

I need to remember I was born lucky. That life is about the ups & downs, that there is no one formula to making sense of life & getting anything out of it. "Rules are for people who cannot make up their own!". I need to celebrate the downs as well as the ups. I need to celebrate my survival in the downs. I need to demonstrate my resilience & patience, to allow the luck to kick in.

I know I have not covered every eventuality, nor will I be able to. I need to be flexible in coping with whatever comes. I will need to change & adapt, and that in itself is exciting.

So I hope the voyage is eventful. That I embrace ALL the possibilites that are thrown up & I take the time to reflect upon my voyage. It should be fun...

Where's my "black swan"?

Recently on holiday I read a great book, one that perhaps would change my life (if that is not too profound!!!). The book synthesised a great number of my thoughts & philosophies of life, while showing & clarifying a number of my own thoughts.

The book was The Black Swan by Nassim Nicholas Taleb. Overall, the author seeks to establish that the world, especially the social science / economics / business world, is full of Black Swans. Black Swans are creatures that are unpredictable and have a massive impact, and after the fact are post rationalised into making a linear "story" to highlight how we should have seen it coming, and from this post rationalisation we can in turn predict the future by a process of extrapolation. For me it hit a chord across a number of different things in my life: my philosophy in life (how random it really is and how we never know what the future holds!); my relationships; my understanding of my emotions; my business plans and my plans for life.

The bits that really stuck out for me were in the final chapter and made me think and also made me laugh. In life, I need to gear up for where there is a positive Black Swan, while minimising the negative Black Swan. I looked at my current life and realised that the opportunities for allowing the positive Black Swans were severely limited, and in actual fact if a Black Swan was to happen it would probably more likely have a negative aspect to my life.

I realised that even if my employer had an unexpected positive result, say from a new product launch, then I would do well, but not that well. My only real upside was, at best, a promotion and a couple of extra grand in salary every year - all good, although a little on the low side of impact to my life as I would just have spent it all on beer (just like the rest of my salary!). However, if there was a negative Black Swan at my work it would really kick me in the ghoulies... I might lose my job, or my pension, or be demoted etc, and that Black Swan has come up time & time again both with my employer and others. In fact I'm not sure if it really is a Black Swan, given that over a long enough time frame it would happen so it is therefore predictable. At that point I became the turkey who realised that although I had been getting fed by the farmer everyday, tomorrow might be my last day before the chop...

I then started to think how far am I exposed to a negative Black Swan if I start on my own... Well... at worst case, it is NO WORSE than with my current employer as I end up without a job or a pension or I end up taking a job which is below my current level. But it might not be as bad as that if I have a negative Black Swan in my own business. I will have started my own business. I will have gained valuable experience, experience that I can "sell" to others as an employee. I will have broadened my horizons and opened myself up to far more positive Black Swans than I am currently exposed to. So even without a positive Black Swan, my life is no worse off. And that's without even thinking about what happens if there is a positive Black Swan - only massive upside, untold wealth, power and ultimate global domination!!!!!! Yeah right... But its got to be better than this.

So where's the option call?! It wasn't a difficult choice!!!!

A couple of things over & above the book that I was able to draw out, were about "not sweating the small stuff". There are enough distractions & stress points in life, and getting wound up by the relatively minor things that happen everyday doesn't help when the big impact stuff comes along. Reflecting on the book also helped me think that one should remain open to the possibilities that a Black Swan (positive or negative) can have - a Black Swan can be directly good / bad (i.e. its impact directly affects me) or indirectly (i.e. if I tweak / change something I can really take advantage / minimise this particular Black Swan). Finally, it made me focus on the direction of the voyage rather than the minutiae of what has to go right to make it happen. That particular thought gave me great reassurance.

In the final chapter, the bit that made me really laugh and resonated strongly was a quote - "Missing a train is only painful if you run after it!" (pg 297). Too true...

Up and down like a tart's nightie

As Big Chris says in Lock Stock and Two Smoking Barrels, "it's been emotional".

My confidence swings constantly on virtually everything, and I haven't even asked for money yet!!! I doubt I'm going to get more confident as things progress...


I've been mulling these business ideas over in my head for at least a year, and through this process of mulling, I've defined & refined the business models hundreds of times. Starting from pipe dreams where I was going to make more than the GDP of some nations, now to something far more realistic yet still audacious. Something I know can make money and something that can be built.


Yet the confidence levels dip & rise like swallows on a summer's eve, with some taking a lead while others thoughts will dart up and take me away from that thinking to another plain, problem or opportunity. It really is harem, scarem stuff


I think this is a really great idea and its actually not that difficult to implement, just will take some determination, some supportive partners, some cash & bit of luck. We don't need to find the holly grail, we just need to assemble the components that have been proven to work before in their individual parts. But then I think, "Well why hasn't somebody else done it?". It can't be that I am massively creative & talented. its too straightforward. But may be its straightforwardness has been missed by everybody else, who is too close to the action & too involved, protecting their own interests. Then I think, jeez, I must have missed something pretty substantial out in my thinking, that means it won't stack up. Arrggghhh! But what is it?! I don't know!!! Is that because I'm not an expert in this field?!! But then again, if I was an expert would I have seen the opportunity... now I'm getting trapped in a logic loop!!! ok... calm down... I can do this... its easy... I just have to bring together & unite a disparate group of suppliers & partners and make it work... I've done that before... but how do I stop any of them nicking the idea and going off on their own???? Arggghhhh... I just need to micro manage them, and pick my timing... I need help on this.... I can't do this impossible task on my own... well I can take it so far and then see what happens... but that is not the key to success - I need to be single minded & know what I'm doing. I am. I'm just not doing it - yet!


I know I have to get on with this, as the longer I leave it the more frustrated I may become, the less likely I will do to get on with it, and the more chance somebody else will do it instead of me - and HOW frustrating would that be?


I doubt my capabilities at times too - will I be able to recruit a great team of people around me? Could I persuade people I have worked for / with in the past to come & work for me, not challenge my authority and still make things happen? Have I got the key leadership skills? How will I handle things when I am under pressure?

So these are the emotions behind it all - pressure of time, pressure of a dream, pressure of making it happen, pressure of not appearing stupid, pressure of bringing people along in the journey. And its all ambigious at the moment, with nothing concrete. And that's what it takes to be a leader & an entrepreneur - to work the way through the ambiguity.

And I know all of this is normal... its what everybody experiences not just when they are starting their own business but also in many different adventures in life! So bring it on...

Don't buy management books from airport book shops

While studying for my undergrad degree, I remember a discussion with a tutor about the merits of books by "gurus" of Management & Business thinking that would commonly be found on the shelves of that niche shop - the airport bookshop.

Basically, in the main, these guru books provide little academic understanding to Management was the message I was getting loud & clear from the tutor, and upon contemplation I thought so myself. Here were consultants (in the main) pulling together their reflected, anecdotal wisdom about the companies / problem they had worked on and had introduced new terms such as "breaking the management paradigm" to establish their thinking into a more formal, academic style with little or no direct academic reasoning or process (such as hypothesis testing, controls, peer review etc). I vowed never to spend my money being seduced by the management guru's wares from airport book shops (although I did vow and have started my own little book of learning's as I go through work, which you never know...)

As an aside, the airport bookshop is in itself an interesting & niche outlet. It caters for bored passengers stuck in the purgatory of their lives before going on holiday / coming back from holiday, or going to a meeting / coming home from a meeting. They are part library and part shop, and for the exclusive use of killing time. They allow people to browse, and are dedicated to their needs of their target audience. Titillating, sex filled novels for those embarking on holiday or providing the answer to that business problem you actually didn't know you had, but is captured in a tidy little TLA or is the new buzz word you heard some young woman in marketing talk about in the canteen que the other day.

So over 13 years later, I have ended up succumbing and buying an airport management book, to help build my confidence. I actually bought it in London's City Airport en-route to a soiree in Scotland (not business, just all out pleasure with friends!).

I now feel a little ashamed - don't know whether its the purchasing of the book or the feeling that I once thought these types of books were not for me although now I NEED them.

The book I bought was the Harvard Business Essentials: Entrepreneur's Toolkit: Tools and Techniques to Launch and Grow Your New Business and its written with a strong academic flavour, with good tender morsels of everyday case studies that help you through building the confidence to take that first step. So far (and I've read in detail the first three chapters and skimmed the whole book), it seems as if the book will be a good checklist and a great exercise in being able to answer the inevitable questions from any potential investors.