Business Plan : Examples and Best Practices of Business Plan Writing

Hello, my name is Ian Casterton and welcome to StartMeUp videos today we’re joined by doctor Steven Gedeon to discuss the proper techniques to business
plan writing. Thanks for joining us Steve My pleasure Steve you have started over a dozen companies venture
capital firms and nonprofits Can you tell us about your most recent company i haven’t started over a dozen i’ve been the CEO,
turnaround or started over a dozen My most recent company um… probably
would’ve been 3DNA we raised five rounds of financing five or six rounds of financing and it’s the number one download in our product
category for the last year and we grew the company to over a million in revenues and over twenty employees before declaring victory and moving.
Ian: Congratulation on your success.
Steve: Thanks and you have also started a number of venture capital firms
correct ? yes of the largest would’ve been are hundred
billion million dollars US VS program based out of san diego I was also involved with starting a couple of smaller seed venture capital firms as well so you had both perspectives, You have asked for money as an entrepreneur and you have spent someone else’s money as a venture capitalist. Can you tell us about the different perspectives ? It really doees give you different perspectives When it’s your baby and you are passionat about it. You don’t understand why don’t these idiots get it and then suddenly the next week on the other
side of the table going wow why don’t these entrepreneurs get it All I want is a simple answer to this, this and this and the entrepreneurs just don’t get it so yes it has given me a really intresting perspective on the both buy and sell side of the transactions and now you teach business plan writing correct ? that has given me an even bigger perspective. I thinnk Confucius said
something like; to really understand something you know if you hear something you learn
a little bit if you do something you learn more but to learn the best you have to teach somebody else
something so it sounds like a business plan is a useful
tool for just the entrepreneur just to get their ideas on paper ?
Steve: business plans play a variety of roles. Certainly a number of business I have started up, we never had a business plan.I have seen a lot of well written documents saying don’t waste
of time writing a business plan certainly for some businesses you shouldn’t
waste your time just get out there just do it do it,do it,do it and why bother write it down on a piece of paper but business plan certainly play a very
key role for certain reasons so certainly if you’re trying to raise financing and you want to promote yourself as a credible intelligent
entrepreneur or with the well-thought-out business plan you know what the money is going to look
like, how much you need and why then people want to see at least something you should keep it short i would say very few people will read more
than twenty, twenty five pages. That would be it a lot of people won’t go beyond the executive
summary before they make a decision on it so there is a lot of different reasons to write a business
plan so i’m an entrepreneur and I just decided, I want to write a
business plan Steve: Good for you
Ian: Thank you What are some strategies that I can get what is in my head right on the paper ? do I have to think about an outline for everything or should I start right away ? Good Question i think that the writing the business plan itself is not nearly
as important as the process by which you think through what is a successful business that if you leave if you think through and
write through what makes a successful business and figure out all those things then the business
plan will write itself so so when I teach the course for example What I start with is saying just write down week two or week three Just tell me what your idea is clearly and succinctly what is your idea and surprisingly that’s that’s hard for a
lot of people that’s, they talk around it’s they it seems clear in enough in their own mind when they
try to put down on a piece of paper the idea get’s burried under too many words you’ve got to be able to convey what your
idea is in a sentance maybe two if you’re selling to your mom who loves you maybe
three sentances because she will pay attention long enough but if it’s not if you can’t clearly articulated at a paragraph then it’s not clear in your
own mind that’s that’s the first phase of just what
is it and then second phase i usually go through is i say tell me in detail who your customer is and why they care and very often what’ll happen is as people think about who their customer is and why they care then they have to go back and
change what the original idea was and so the idea of being able to really focus on
who that customer is is so important and and and most entrepreners don’t
get this. What they do is to say I’m seeling to women well the problem is you can’t sell to women The thing I like to say to students sometimes is imagine you started a company there’s a telephone start making phone calls you are selling to women what are you going to do just pick up the phone call the first person Hi, are you a woman ? let me sell at you You stand on the street corner in a chicken outfit, hey women buy my thing ?! you have to have in mind a particular woman doing a particular thing what is it about that particular individual
that makes them pay attention to your idea, love your idea
and buy from you and and the more you can’t focus on and
it’s segmentation niche marketing kind of business lingo associate with this the better you can articulate who that target
demographic is their psychographics what they read where they hang out better you can place your message in a place where they’ll see it Steve: Does make sense ?
Ian: It does, and it sounds like you are detailing a lot about
the exectuive summary and how that is the more important element of a business plan. Steve:We haven’t written the executive summary yet. I’m still working through, think through the right business. You can do this on a piece of paper, hand written and so let me go through a little bit more some of
the kind of a big conceptual blocks that you need to fit all together maybe i’ll back up a little bit the business planning process self most business planning books seem to say you
start beginning and you write through the end but that’s not what you think through business. The way
you think through a businesses is you start you start thinking through a little bit then
you realize you got to go back to beginning and start over again then you think you little bit more go back to the beginnig so you’ve got the slate clean process to go
through before you fine you’ve figured out how to make it all came
together now you can start writing a business plan so the first thing you do is to say you in
general terms safely what’s the business and then say cooled by selling to but in detail not just you know women or you
know people between the ages of twenty five and
thirty five you people of different you got out honor that’s when you’re trying to sell your
product to them and so we figured we hear from you customers and uh… figured out how quickly with the price point
needs to be as an example then obviously need lookit career competitors are uh… then comes kind of a quarter business concept of strategy how it different from your competitors that way that’s important your customer which means you don’t know who the competitors
are getting the customers are and yet a hundred different now the figure that out and put it to go back
to rewrite business is all about at any time we have to go back to rewrite the customers
are again sorry at any time in this process should you be taking breaks to talk to any
potential customers the market will tell you anything you need basket but so many people rate these business plans
that are castles in the sky dreams based on you know it’s a billion dollar market side
is gonna get a fraction of a percent of the billion dollar market may act like that means
anything that’s not what business is the bill businesses are built one customer a time once sale at the time okay uh… just uh… dual curve ball uh… as a venture capitalist country with
them hundreds of business plan meanwhile was the
most important component or what did you first look at tearing me if you should keep
on reading or his electrical reports um i can speak with the story on this matter
everybody agrees on this point person you look at forces the executive summary of the first thing you look at is really uh… but people bet on the jockey before the fed of
course people that honor eighteen with the big plan over
and any plan with the people so they look at the entrance uh… they look at the overall business idea and that damn right to the financials and that seems like
it’s the most challenging part of the business plan ras pickens struggle with the financial
thing all the time shannon adaptive and so many of the business plan but six release
declined step one is estimate the overall size of the
market you know some big crazy large number step
to estimate your percentage of it all i need is one percent step three make a random crazy yes at how to go from zero to that one percents
over specs for your time and that becomes your top-line revenue number but but that’s that’s such fantasy and again it doesn’t honor the reality of hollow on thurs build a business make once
it with time so as a superficial example you would say month one popping a put in my financial protectionism
i’m gonna make five hundred cold calls of those five hundred cold calls a hundred
people above the election speak with of those hundred people tend to go into be interested alarming face-to-face with five of them of those five i’m not gonna close any sales month too i’m going to make three hundred phone calls you know meet with
that’s number of people and then i’m calling to make a sale and also part of those revenue drivers are why do you make a sale who wanted to make that sale to there’s a
big company little company like what part of my target demographic how much is that still than before so no as a b c when i look at that time thousands
eilers instruction arbitrate ten thousand dollars i can see it hard to come up with
that ten thousand all i see you can make a bunch of phone calls
you to meet with people you can’t see why the san francisco open a
cd expense that we are very good on and uh… all i see you not and you get a filmmaker silverstone i’ve been there you’re gonna feel glad to
be you know that you want to you can see all the steps of the author is
going through to get to that sale now that number has some credibility it’s not you know you throw darted a dart board and
month one of my have ten thousand dollars mean or even worse you say something stupid like
that this is conservative everybody knows that the numbers that you’re
putting your business plan are long before you put and you’ll be believes your numbers and chances are you getting your numbers right
are astronomically zero but the question is once you’ve got my millions of dollars your six months it and now the numbers are wrong we all know
to be wrong the question is has the projections giving
you a died management action so that’s the real purpose of the financial
numbers is does it give you a guide to action but let’s say for example that you say uh…
okay uh… on my spreadsheet first able to do them as
they are going to give away ten thousand brochures of those ten thousand brochures arm we’re gonna get a two percent response rate people go to our website uh… as result we have a certain number of
hits on our website fall from the number of people come to our
website we’re gonna conversant percentage of those two cells uh… at a certain dollar value and now what you know finally revenue number it was is you know all those numbers add up basically what comes and goes your numbers are wrong question is why what did you feel depicted
you give away the right number brochures yes but we didn’t get two percent sponsoring need we need to change the brochure didn’t change the color of marketing message
or who we give them out too maybe we need to change that or else they be did percent response rate
but didn’t get the drive through the web traffic what can we do to fix that mike you know maybe once people come to the website
they’re not buying if you do something different your website
if the price point is wrong but usual guide to management action as opposed to what we said would be ten thousand we didn’t
make ten thousand which we do different uh… i don’t know tried harder let’s try harder it up but that doesn’t work for you but have you how do you tell your business
plan for these different audiences you always have to evaluate your audiences
what they want to see and what the call to action is from them so the call to action for a brochure could be anything from by now call this number on go to our website began tell people what
the called actions so any chance you specific question perfect or after the cds is is a
different plan and you would write to your own poorly which is a different plan that you might right
for your bank which is a different plan than you might right for your phone clarity of
thought are for one of my going to do to uh… make money off of this venture as
opposed to is great ideas motivational pocket lots of pictures stuff like that are you getting a lot of questions that archer’s out out there in the world have i’m sure uh… thank you very much if you have any
other resources needed for now line for business plan warning or sources please visit family oppression
dot com defense again for joining us trip

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