Challengers and champions. Runners-up and front-runners. Pedestrian and pandemonium. Often what separates these things happens in a moment.
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Wednesday, April 04, 2012
Before you send your start-up business plan ideas to a prospective funder, you should think about the Elements of Sustainable Companies and Writing a Business Plan.
Elements of Sustainable Companies
Start-ups with these characteristics have the best chance of becoming enduring companies. Investors like to partner with start-ups that have:
Clarity of Purpose
Summarise the company's business on the back of a business card.
Address existing markets poised for rapid growth or change. A market on the path to a £750m potential allows for error and time for real margins to develop.
Target customers who will move fast and pay a premium for a unique offering.
Customers will only buy a simple product with a singular value proposition.
Pick the one thing that is of burning importance to the customer then delight them with a compelling solution.
Constantly challenge conventional wisdom. Take the contrarian route. Create novel solutions. Outwit the competition.
A company’s DNA is set in the first 90 days. All team members are the smartest or most clever in their domain. "A" level founders attract an "A" level team.
Stealth and speed will usually help beat-out large companies.
Focus spending on what's critical. Spend only on the priorities and maximise profitability.
Start with only a little money. It forces discipline and focus. A huge market with customers yearning for a product developed by great engineers requires very little firepower.
Writing a Business Plan
Investors like business plans that present a lot of information in as few words as possible. The following business plan format, within 15-20 slides, is all that's needed:
· Define the company/business in a single declarative sentence.
· Describe the pain of the customer (or the customer’s customer).
· Outline how the customer addresses the issue today.
· Demonstrate your company’s value proposition to make the customer’s life better.
· Show where your product physically sits.
· Provide use cases.
· Set-up the historical evolution of your category.
· Define recent trends that make your solution possible.
· Identify/profile the customer you cater to.
· Calculate the Total Addressable Market (top down), Serviceable Available Market (bottoms up) and Serviceable Obtainable Market.
· List competitors
· List competitive advantages
· Product line-up (form factor, functionality, features, architecture, intellectual property).
· Development roadmap
· Revenue model
· Average account size and/or lifetime value
· Sales & distribution model
· Customer/pipeline list
· Founders & Management
· Board of Directors/Board of Advisors
· Balance sheet
· Cash flow
· Capitalisation table
· The deal