Just take a look at the following section – it’s from BBC website on Jan 20, 2002 – when the global economy was severely down, and almost every tech company was losing revenues and market value on a daily basis.
As you will notice, all kinds of problem happened to leading tech companies in 2001-2002 – part of the reason was that they had built structures and teams very recently in 1999-2000 that were preparing for future growth – everyone was preparing – nobody wanted to be left behind – the problem being that the growth projections were just too steep. Some tech companies had planned 500-1000% increase in revenues in 2 years, and those were inflated business plans.
The situation was not very different from non-tech companies.
The question is: How does one prepare for such situations? What are the learnings from last time, which we can put into use the next time business slows down?
If you go through the above links, there are some lessons for every business owner and executive:
1. Consciously increase the Cash and Current Assets on your balance sheet from many months before you actually are in the middle of bad business season.
2. Watch your Debt/Equity, and take any possible steps to reduce the debt component, while the market is liquid.
3. If you have been thinking of selling off a business unit or a brand – because it’s not fitting with your long-term business strategy – decide Yes or No rapidly – and if it’s a Yes – then do it with top priority – otherwise it is very likely that you are losing valuation on it.
4. Outsource as much work as possible – preferably foreign countries – it helps to have business partners/vendors who are located in other markets – because they will have an incentive to help you get new business in case you are facing business slowdown in your home markets.
One of the most common requests we get is: How To Write A Business Plan?
In this post, we want to share our learning on business plans with you.
Going by the number of business plans we reviewed or helped in prepare in the last one year, the global economy is doing great.
A lot of individual professionals have opened their own companies, and many companies are looking to grow with global demand for their products/services.
The physical location of people is getting less relevant in many industries. The Internet is playing a role in every business plan, across industries: Online Business ventures, IT/ BPO/ KPO / Outsourcing services, New Media, Pharma/Healthcare services, Food Retail/Cafe, and Retail chains, etc.
While there is no one answer to it, we want to share a good business plan template with you that we have used with success: http://www.alphaneuron.com/BizPlan_Template.pdf
From our business plan reviews, we also see a common mistake many people are making a there is a lot of emphasis on how much money is needed and what kind of sales will happen, etc.
But there is insufficient information and analysis on the market in which you want to play and the differentiators with respect to competition, and therefore, what makes you think that you will win the sales that you show in your plan.
Also, none or very little information is shared on the systems/processes in place for the business to run if you were to go down for some reason. These are important parts of a business plan.
And we hope the template we have shared above will help you. Ideally, 20-25 slides are good for any business plan, including references and supporting data.
Please keep in mind the following:
1. The purpose of the business plan is to convince the investor that your plan is practical and that there is a good chance for success.
2. If you send your plan to every VC and investor around, your effort will be high, and also your rejection rate. Therefore, first connect with propective VCs and check if they are interested at all in what you are proposing. It is often more productive to send customized mails to 20 VCs than the same mail to 200.
3. Be willing to face a lot of NOs. Be ready to start things small with alternate funding arrangements. If you will start only if VC money is available, then your plan is weak.
4. Show options at key decision points, so that different possibilities are visible. For example, what if the demand turns our to be only 50% of what you planned? Or what if it is 200% of what you planned? What if you go down with illness? What if a large company creates similar product? Identify real-life risks and show options for them. This will be received well because many VCs often start from the business risks.
If you have any particular questions or need help with your business plan development or business plan review, please feel free to contact us, and we will be able to guide you – under an NDA of course! Thanks.
Related Links:
1. Business Plan Service
2. Business Plan Sample
This is a recent business plan developed by us, and it is shared as a screenshot so that none of the details are visible. Focus on the Table of Contents – note the breadth of topics covered within the 12 page plan. In our experience, it is possible to cover even the most complex business plans within 25 pages. Most business plans can be covered in good detail in 15-20 pages, including Client/Vendor feedback, and market research findings that can be put in the Appendix.
Page Last Updated on: 31 March 2008
