"No Business Plan survives first contact with the customers" Steven Blank
Banks insist you do a business plan, to make you prove you have thought things through. When you sit there and do a cashflow and a Profit and Loss, you suddenly discover just how hard you have to run to stand still. You expose your burn rate, your exposure to debt and how if just one supplier insists on money up front or one big client defaults, your position becomes precarious.
But that Business Plan is not for Investors.
"Investors are not solely evaluating your company's story.They are also evaluating your ability to convey that story." Bill Gurley of Benchmark
Investors want to see what is in it for them. That involves...
Showing them how it will catch on and that you have the skills to make it do so (an e-commerce site with no visitors, or with a flawed engagement system is worthless).
How you handle the orders generated - who your suppliers are, how you undercut traditional retailers (or attract a niche), how you deliver and what customer support is required.
Where the money is. After subtracting the cost of sale and the services needed to make it happen, how much is left. How quickly can capital be repaid. How sustainable is the business model. And how the net value of the business grows to become a bankable asset (which they have a share of).
The team. Are there people involved who can do what the business promises and make it happen, or is it a pipedream from someone who doesn't understand the complexity and the issues.
This is normally done, not on paper in long reams of third party prose, but in a short, snappy pitch deck like the one Jerome has just shown us.
And how does this differ from a Business Model?
Well that's the idea that an e-commerce site is the way to do this. That will change.
Hello Mr Omirigbe,
I do agree with many of the people who made their point in this thread. Me personally are not structured in the same way that Mr Johnston suggest that you should be (However he is not wrong). In entrepreneureal research it can be described as two ways of dealing with the entrepreneurial process. The typical rational way of thinking where all these steps are carefully planned and executed. You get total prodictability from this process. The effectual reasoning is more of a unstructured way of processing the oppertunity. You leave more flexability in the business plan, and are more suited for a dynamic market. We accept that the future is not controllable but we are faster att reacting to changes in our environment.
I think it is imperative to point out that cultural differances is important here. In some countries where traditions are more strict, the rational way with all processes are probably the best way. In more "casual" markets investors are more responsive to the "open ended" version of the business planning.
For my start-ups and businesses I have always pitched ideas based on a Business model canvas. Usually a three layered canvas that are in depth. Then from there I work together with investors to go through the processes and into a more rational planning.
I must give the Business model canvas some credit! It is a great tool to map out the business and "play" around with to come up with more and more innovative ways to tackle the different areas of it. Print out a large one and get alot of post-it notes to stick on it and move around. Then summerize it to the pitch.
Great to see ideas for those emerging markets! I really do believe that it is good timing to establish you ecommerce now. Of course e-commerce is global, but I run a e-commerce site specifically for Sweden. It is just to limit shipping to a region and no one outside can place an order (If they don't want to drive to Sweden to pick it up). So don't really see why that would be an issue.
Best of luck!