In a prior blog post I talked about the necessity of keeping a log of business ideas. Many ideas will die on the vine, consumed by wrongtime-wrongplace syndrome, lack of knowledge, or passing interest. A few however, will take on a life of their own. You will start to envision how this idea could come to life and why it changes everything. It grabs hold of you. In most cases, or perhaps the best cases, it solves some personal pain point in your life. Once the emotional hook is set it's time to take a rational view of the idea and start to develop a business plan.
The first step is to describe the problem in an unbiased way. It's easy to become biased once you become emotional about your idea. Think about whether the problem is generalized or specific (to you), whether others would consider it to be a problem or an inconvenience, who benefits from the solution, who doesn't want the problem solved, and why the problem has not been solved before. With all of these things in mind do a brain dump. Write whatever enters your head. Try to write 1000 words or more. Write the good and the bad, the fears, the warts, and the gems.
If this exercise hasn't frightened you from your emotional perch then it's time to boil the text into two to three sentences with the final goal being to come up with one perfect aha sentence. First highlight all of the sentences that are hurdles to implementation. These might look something like, "It will take more than 24 hours to scrape the entire web" or "the packaging will be too expensive to safely transport the vegetables across the country". These will be used in the next major step, Identifying the Solution. Throw the hurdles out for the purposes of the current exercise. Of the remaining text highlight the sentences that sound like they cause pain, "When searching the web people have to sift through too much crap" or "Vegetables at my local market are always nearly rotten."
Take the litany of pain and transform it into two to three concise sentences restating the pain. This is where you pull in some trusted advisors and talk them through the idea and pain points. See if they agree or have other ideas about your pain points. If they turn their nose then you should take another hard look at your idea. Was there something obvious you were missing out on. Think about the idea some more and perhaps put it back on the shelf for a little while, attaching all of the notes you've made. Ideas need momentum in order to become real. They feed on other's enthusiasm. If the people you trust get excited, they will be willing to help you in the future, which will lead to other doors being opened. Once you've passed this test boil your problem down to a single compelling concept or pain point if possible. Use the concept as your first slide of your business plan deck. Keep all of the sentences you like describing the pain symptoms. They will become your talking points. Now fire up your favorite mind mapping tool or pen and paper and go!
Veni, vidi, vici!
Wednesday, July 30, 2008
Tuesday, July 22, 2008
Here's the transcript from an IM conversation I had with a friend today regarding business plans.
As you can see, pretty straight forward stuff. I think people get too caught up in creating a comprehensive business plan. In a software startup you need a thesis (the problem), you need to figure out why you have a clear chance of building out what's needed (risk mitigation), and why this grand product will cause people to separate themselves from their money (high value). I think the business plan is a great exercise in force thinking through the business. It just changes so many times over the course of the first 18 months or so it's better to think in terms of slide decks or mind maps.
friend: hey, you have any business plan docs laying around?
friend: that you could share
TimothyJ: you want some sort of template?
friend: no, looking for a real one
friend: that people actually used
friend: and that doesn't suck
friend: i can find templates, but I'd like to see what a real one looks like
TimothyJ: ok. let me see if i can dredge an early copy up. i'm not a huge fan of business plans however. I think there's an internal document you create for brainstorming purposes and then you boil that down into slideware
TimothyJ: you can pretty much use Guy Kawasaki's art of the start as a template for that
friend: ah, interesting
friend: well most of the standard stuff that people put in there is BS
friend: projections of revenue, hiring, etc
friend: but seems like investors want it
friend: even though they know the #s are wrong
friend: way way wrong
friend: vision isn't BS of course
TimothyJ: state your problem, why you are uniquely positioned to solve it, IP, market size, how much it will cost to ramp, a good plan for doing that ramp on a milestone basis
friend: ya, sounds reasonable
TimothyJ: yeah, the investors want to see it's a big market to go after so that's the top down market analysis
TimothyJ: then you do a revenue swag based on percent of market with some sort of ramp the investors can swallow
TimothyJ: first year is to nail down early adopter accounts (and build out product)
TimothyJ: not big revenue expectations
TimothyJ: 2nd year (in your model) would be channel sales relationships and proving out the sales/delivery model are repeatable
TimothyJ: 3rd year is revenue growth, showing scalability
friend: that sounds like a reasonable model
TimothyJ: brainstorm all that, condense it into a deck, and then go practice pitch it to a friendly vc
Tuesday, July 15, 2008
Saturday, July 12, 2008
Friday, July 11, 2008
I had a great meeting with Josh Bernoff, one of the authors of Groundswell today. Josh has a lot on his hands lately with the announcement that Charlene Li and Peter Kim are leaving. Was an informative meeting and always great to work with the people at Forrester. Good luck Josh.
My 9 year old daughter was at the office with me and asked me to
explain what we were trying to do. I told her we wanted to explain to
the other company why we were the best solution. Several minutes
later she pushed a notebook towards me (see above). Incredible! I'm
going to have to put her on payroll...
Looks like the pic is kinda hard to read so here's the list:
1. The best employies [sic]
2. They pull the best info together
3. They pick the finest blogs
4. They give information about everything
5. They give info about the company, it's competitors, and the company's stregths [sic]
truly awesome :)