Friday 23 April 2010

The ISO standard for business plans

If I had a quarter for every time a budding entrepreneur has asked me about what should go into his business plan, then I'd have - let's see - three fifty? I don't know, but put it this way, it's in my top 10 FAQs. My two secrets behind this one are; a) there is no such thing as a standard format or expectation and b) it matters a lot less than you probably think.

Don't agonise over format and presentation - the vital thing is to intimately know your key facts and be able to provide a logical narrative for them. What are your costs? Where does the revenue come from? Who are your customers and how big is the market? How soon will you start bringing in revenue? How is your product different from any competitors (current or future)? What does it cost you to acquire new customers and what is their lifetime value? Have you done this before and who do you plan to work with? Even if you just talk through it you're always better off knowing those things inside and out than having a 200-page glossy document.

And when I say that a business plan matters less than you think it isn't because investors won't want one - they very much will - it's because in the early stages of a new idea what matters most is working product. The best, most detailed, most polished business plan in the world will always be worth much less to a potential backer than a pretty basic, hacked together but functional, beta product.

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