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Pawel Brodzinski on Software Project Management

Starting a Business? Write a Plan

Recently I went through a number of ideas for a startup. I was on both sides: the one who was responsible for preparing a business plan and the one who is asked for involvement and judges a concept.

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.

in: entrepreneurship

2 comments… add one

  • Paul Marculescu January 14, 2009, 8:19 am

    Thanks for the hints. It’s a good and useful list of things to check for a startup entrepreneur and I agree with your final point, that it’s also a reason to clarify what you want.

    I find the following particularly difficult to nail for a startup:
    Long-term perspective – everything changes so quickly, that you barely know how the product will look like in a year
    Business environment – the competition changes quickly also, and so does the market

  • Pawel Brodzinski January 14, 2009, 8:39 am

    It’s a really hard task to create a long-term plan which will go real. However it’s exactly like in this famous quote from Dwight D Eisenhower: “plans are useless, but planning is indispensable.

    Whatever you’re planning most likely you’re going to change that in the future. By the way I wrote a piece about changing a business model some time ago. It doesn’t mean you shouldn’t have a plan. You just should be aware when you need to do some adjustments.

    With business enivronment, well, as far as you’re aware what it looks like and you know it’s changing quickly you’ve already made first few steps. Quite often people ask what are they competitors give you a blank stare. If you’re prepared for adjusting your plans, business environment which changes in high pace shouldn’t be a huge problem for you anyway.

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