Questions

I have completed a 1 year business plan for my startup. Should I do a 2-3 year plan as well?

I am working on a startup. It's a website and app.

5answers

Craig is right, you'll need 3-5 year (you might aswell do 5 year btw) financial projections; a spreadsheet of course, with summary yearly costs/EDITDA etc on a slide in your deck.

The plan can take the form of a slide deck. Use something like this as a template:

10 to 15 Slides

COMPANY PURPOSE

Define the company/business in a single declarative sentence.

PROBLEM

Describe the pain of the customer (or the customer’s customer).
Outline how the customer addresses the issue today.

SOLUTION

Demonstrate your company’s value proposition to make the customer’s life better.
Show where your product physically sits.
Provide use cases.

WHY NOW

Set-up the historical evolution of your category.
Define recent trends that make your solution possible.

MARKET SIZE

Identify/profile the customer you cater to.
Calculate the TAM (top down), SAM (bottoms up) and SOM.

GROWTH
Go to market strategy
If viral, why will it be viral? ('Sharing' is not an answer)

COMPETITION

List competitors
List competitive advantages
What is your unfair advantage?

PRODUCT

Product line-up (form factor, functionality, features, architecture, intellectual property).
Development roadmap.

BUSINESS MODEL

Revenue model
Pricing
Average account size and/or lifetime value, LTV
Sales & distribution model, CPA & CAC
Customer/pipeline list/status

TEAM

Founders & Management
Board of Directors, and any key Advisors

FINANCIALS

P&L
Balance sheet
Investment to date
The deal (EXCLUDING valuation OR completion date)

AND financial projections/cashflow (as excel s/sheet, ideally 5 yrs but atleast 3)

** You'll also need, for review before investment (due diligence): **
- Company formation docs, any trademark, patent, etc certificates
- CAP table (current shareholder ownership to two decimal places %
- Contracts of employment (Founders should have these also, and you should have founder vesting agreements)
- IP assignments for employees/contracts current & previous if not included in their employment contracts
- Any insurances, atleast the minimal required by law (i.e. in UK employers liability if you employ anyone, public liability insurance if members of the public visit you at your place of work or if you perform work at places of work owned by third parties, and Professional negligence, not mandatory but sensible (covers you for eg. making a mistake in a piece of work for a customer, Loss of documents or data, Unintentional breach of copyright and/or confidentiality, Defamation and libel, Loss of goods or money, your own or for which you are responsible).
- In the UK, registration with the https://ico.org.uk/ (illegal not to if you store peoples data)

Slide headings based on an amended list from Sequoia.

Long typed out business plans cloud the precision that data and specifics provide. A deck as above with few words, forces you to get to the crux of your business and your go to market strategy and will be valuable both internally to you and your team and of course to raise funding.

If you can't make it concise and clear, you probably have not thought it through enough.


Answered 4 years ago

If your business plan is for the purpose of raising money, then funding sources will want to see 3-5 years of financial projections as well as market information that will support those numbers. I would need to know what your definition of "business plan" is.

If you look up typical business plan templates, you can find the items that should be in a business plan; however, 20 and 30 page business plans rarely get read. I suggest no more than 10-12 pages of what funders want to know to lend or invest money.

If you would like assistance on this, feel free to contact me as I have prepared many business plans and pitch decks.

Best of luck,
Craig


Answered 4 years ago

Most likely no. A single business plan is enough. The key is to make sure that what you actually wrote is good. And if you are a first time entrepreneur, you have little way of verifying whether what you planned will actually play out. This is where you have toget advice of experts to go over your plan.


Answered 4 years ago

Hi,
I've built start-ups both web/app-powered and people-powered. You've gotten good advice from the others so here are some of my top-of-mind thoughts:

1. Do integrate your 2-3 year plan with your 1-year plan.

2. Don't over plan for Years 2 and 3. Just lay out a few (not all) possible futures with an estimate of the order of magnitude of the potential size your business in some basic business terms:
a) revenue and where it's coming from
b) customers or members or audience...depends on your business model
c) when do you expect to make a profit (if ever - which is okay depending on your business model)
d) if you plan on selling the company, who the possible candidates would be (e.g., big company in your space, the public, etc.)
e) what and how many resources will you need and where will you get them? It's a "sellers market" for talent right now so this will be your Achilles heel.
f) can you lead the team

3. Do plan Year 1 in concrete, achievable milestones that support the theory of your business case...both your business model, what problem your web/app, and does it actually work.
4. Do build a start-up team that will get you through the first 90, 180 and 365 days with an eye toward years 2 and 3.

The level of detail and polish of your plan will depend on your audience. If it's for yourself (and your own team), don't over do the packaging but do make it very concrete. If the plan is for outside investors, do everything you'd do for yourself but do package it for external consumption...but make it short and sweet.

Please Request a Call if you'd like to discuss further.

All the best.


Answered 4 years ago

Just build the site and generate traction first. You need only 90 day plan. Validate the business model. Then build the app. This will take a few months. Now write the business plan and you would have developed enough confidence in the business model and the numbers can be corroborated.
When you do, write the plan for 3 years as that will help you clarify your expansion strategies and plans.


Answered 4 years ago

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