Actually no matter which side I was on one thing was common – when thinking about a startup one should start with writing a business plan. When I think about business plan I don’t have any formal document on my mind. That’s rather a draft, but complete one, telling others what do you want to do, and why will you succeed.
When talking about a complete plan it should cover:
• A product description. What do you want to do? How does it differ from other products which are on the market?
• Usefulness of the product. Why would people use it? Who will use the product?
• Business model. How do you want to gain money from your users/clients?
• Business environment. Who do you compete with? How are you better then them?
• Development. How do you want to build a product? Which resources do you need?
• Detailed short-term perspective. First year should be planned rather precisely. How many people? How much would you pay them? What about office and administration stuff?
• Long-term perspective. What is a coarse-grained plan of development for a longer time span? How can it change over time?
• Numbers. How much will it cost investors to maintain a company? How much money will be brought from sales? How does cash-flow look?
• Growth. How fast your incomes would grow? And costs? When do you plan to break even?
Technically as far as you address those questions the form shouldn’t matter much. However you most likely will be asked to prepare a SWOT analysis or something similar. From my perspective it doesn’t have to be a big document. Several pages should be enough. The quality is more important than quantity here.
Personally I find writing a business plan opens my eyes to new aspects of what I’m about to do. Sometimes it shows new opportunities; sometimes it points you that you’re heading to a dead-end. As far as you can’t convince yourself something is worth investing you money (assuming you have some) you won’t convince others either. As far as someone doesn’t cover one of important areas in a business plan you risk you’re doomed if you follow them.
For me the reason for writing a business plan is mainly not for convincing others to your idea, but to put your thoughts in order and ensure yourself that’s a good plan.
Whole Entrepreneurs Time series.