Business Plan Template

Following on from a post a while back about Bill Aulet's business plan template, I thought I would share the 8 slide PowerPoint template that I have been using for a few plans that I have been putting together forImobigo.

I found the template really useful in answering the basic questions that are required for a business. In addition to the presentation and the full business plan, I also prepare an overview of the plan in brochure format that can easily be understood by investors or others with interest in the business, without having to wade through a whole plan.

The business plan presentation template can be found here:

Busines plan template

Please feel free to utilise it how you wish, and let me know what you think, what you feel is missing, or what you feel is unnecessary.

Entrepreneurship in the UK

I've been back in the UK for a few weeks after my whirlwind trip of the US and it's certainly strange to be back.

Its interesting to see some of the culture differences regarding entrepreneurship coming up already, such as the speed that things happen here in comparison to the States and the cautious attitude to everything remotely risky by all those involved.

I am so far fighting the ability to fall back into this attitude, which is helped by being surrounded with some great people here in Middlesbrough who have the ability to rise above and beyond the expectations people have on them.

I'm slowly coming to terms with things here, but I think it will be a while before getting fully back into the business. The good thing is there are still plenty of opportunities around and I've already had some interesting discussions about moving some of the exciting project that are in development moving forward (ZiiMo and BluGo)

US vs UK Entrepreneurial Culture

There seems to be a number of reasons why the culture in the US is better established to harbor entrepreneurs than the UK. The three key points that keep coming up is the access to money, the reaction to failure and the established communities.

I have discussed the failure aspect previously, so won’t go into detail here, but the general perception of failure is dealt with in much more positive way in the US than in the UK. That isn’t to say that if you fail with a business venture in the UK, it’s the end of it, but it is a lot harder to win the confidence of future partners and investors in new ventures than it is in the US.

Funding is another big issue, where there is a lot more capital available and it’s generally easier to access in the states. Financing institutions such as venture capitalists and angel investors are also more established which helps more new businesses get off the ground quickly and with a greater starting capital than in the UK. This is changing however, and there are more angel groups created all the time in the UK, but they aren’t mature, and without the experience of similar groups in the US. The willingness to take chances in potentially riskier ventures is also more prevalent in the US, which broadens the opportunities for entrepreneurs to get their foot in the door.

Another aspect which I feel is different is the large scale and scope that people think about in the US. Where it’s rare to find new entrepreneurs in the UK with international ambitions, and large scale plans for the business, this is almost thought as a given with ventures, especially in areas such as Silicon Valley. Clearly there are plans in effect to try and change this situation with schemes such as the Kauffman Fellowship, and the prevalence of international trade advisors around the world. I just feel that more has to be done at the earlier stages in business, rather than the tendency to focus on larger established businesses.

Of course the UK isn’t by any means the worst place to start a business, with lots of support and guidance available both nationally through government initiatives through to local councils and universities starting to realize the importance of encouraging entrepreneurship. A lot is being done in various hubs around the country to foster some the same buzz that surround Silicon Valley, but it will take many years to reach a similar culture that can be found there, and in the US in general. The mix of thriving businesses, access to talented and willing workers and the business support network that are all key for such an area to succeed don’t happen overnight, and it will take a lot of effort, and patience to try and re-create the elements that are all so important elsewhere.

There are definitely opportunities to succeed, especially in the North East region in the UK where they are willing to put the necessary effort and investment in the area to make it a thriving place for companies to be. With institutions like the University of Teesside investing heavily in entrepreneurship, and trying to educate students and the local community about the value of new business to the area and the economy it is an exciting time to be an entrepreneur. I just feel it will take time and a lot of mistakes before they crack the right mix of elements necessary to create the right environment that will foster willing and successful entrepreneurs. I hope by putting to good use the lessons learnt over the last 5 months from some of the top thinkers and entrepreneurs in the US I will be able to take advantage of the situation emerging in the UK and even impart some of this knowledge to help making it the best place in the world to run a business.

Risk and Failure

The ability for a company or an entrepreneur to try out new ideas quickly can be key to their success. Even more of a factor is their ability to see at the earliest possible stage when their ideas are not going to succeed and abandon them with the minimal loss of time and money. This could be through analysis of the situation, or simply because the venture failed dramatically.

One of the advantages young companies have is the speed in which they can act, and bring new ideas to market, without the need for lengthy corporate analysis and countless review boards. Ideas can be generated in a morning, and testing by the afternoon to see whether they should move forward with a plan of action. It’s this quick turnaround that can be the difference between success and failure in today’s fast moving markets.

However the challenge comes when deciding which ideas to pursue, and how far to take them before either more resources are allocated, or the project is sidelined before it eats up too much money, or just looks like it’s not going to be as successful as necessary to make it worthwhile. The techniques that can be implemented in doing this, include bootstrapping the venture, outsourcing development work, small scale – holistic testing and keeping flexible in the face of changes; so generally everything that successful entrepreneurial companies do anyway.

What these policies encourage within a company is to try many new things, and test how well they work, or in many cases don’t work. By learning from failures the company is in a better position to go forward, learning from these lessons. If the company is able to do this using minimal time, money and other resources then even if the venture is a failure then they have been successful. This can give them huge advantage over large companies that don’t have the ability to do this, and must produce piles of extensive and expensive market validation, and consumer feedback before even contemplating going to market with a new product.

As Randy Komisar puts it, “Innovation is about taking risks to do things that haven’t been done before” and goes on to rightly describe that if you could understand which ventures were going to succeed before you did them, then there would be no need for innovative companies, as the giants of the world would simply be able to pick them first. As long as the business models (and share holders) of large companies aren’t able to put up with the amount of failure required for innovation then there is space for entrepreneurs to take the risks necessary for success.

How entrepreneurs deal with failure can go as deep as the cultural level, with areas such as US and China having a much more positive outlook on failure than other areas such as Western Europe and India. The ability to fail in business, even go as far as to plan to fail, is a key discerning factor for success in the fast moving business world of today. You only need to look at companies such as Google, Facebook to see how many times they stumbled to get to where they are today, whilst searching for the killer business models that has got them to where they are and it shows how important failure can be, but more importantly is the ability to adapt and learn from failure.

Why Don't Entrepreneurs Scale?

I think the question on whether the entrepreneur is the one to take the company forward to an IPO or large scale venture is a complex one. It firstly has to start with what the individual’s aspirations are and whether they will feel comfortable taking on this role. This is not so much how capable they are, but how dedicated they are, and how much their values and long term goals fit with this role. This is separate to the needs of the business, as it might be in the best interest for the business if the inventor is the public face of the company, if these two sides are opposing, this could cause a conflict with the business.

A lot of the time the choice as to whether the entrepreneur runs the business isn’t up to the entrepreneur at all. If the venture succeeds in getting investment, or has the possibility to go to an IPO then the choice will be out of the entrepreneurs hands and be up to the board of directors, and usually ultimately the investors.

John Hamm has some interesting views on entrepreneurs and how they have difficulty transitioning from a start-up to a large organization. His main point is that the qualities entrepreneurs have to enable their ventures to succeed initially are the exact qualities that cause them to fail during the later stages of a business. These four tendencies are:
• Loyalty to comrades
• Task Orientation
• Single Mindedness
• Working in Isolation

Each has its benefits when working on a startup and can allow the startup to thrive
in its early stage. However as the business grows and the pressure from all areas increases, the entrepreneur will fail unless they are will to learn and adapt to their new situation and change their behavior. This is probably difficult to do from within, as the entrepreneur has to give up doing something that has been successful, but if they are willing to listen to their advisors and strive to understand the best way to behave there is no reason why they shouldn’t succeed.

Facebook has had to go through many of these issues, but has overcome everything that have currently been thrown at it, and Mark Zuckerberg has successfully navigated the company into new markets and successfully created a very lucrative revenue model for the site. I think it’s been successful by staying true to its core market and focusing efforts on rapid development and the user experience on the website. Areas such as photo sharing have proved far more popular than they could imagine, but the experience has been tweaked to make this the best they could make it. The user created applications have also been a huge help with its success, although it’s teetering on the edge of going too far with these applications.

There doesn’t appear to be a magic formula that will predict whether an entrepreneur will succeed into the future, it doesn’t matter what education, or even experience they have. The important factors, as echoed by John Hamm are they have to be open to learning and rise to the challenge.

Changing the world with Robin Chase - GoLoCo

It was great to hear from Robin Chase as she spoke so passionately about her past and future projects. She had a lot of useful insights into her ventures and ways in which we could apply some of her knowledge in our own entrepreneurial activities. I was amazed to hear about how bold and forward thinking Robin is in the way she looks to negotiate areas and fields that she doesn’t necessarily have a background in, but wishes to revolutionize those industries with disruptive thinking. I would definitely describe Robin as a serial entrepreneur, as not only has she started successful ventures such as ZipCar and GoLoCo but also hitting out into Mesh Networking and congestion charging.

Robin talked openly about different aspects of entrepreneurship and touched on a number of areas. She mentioned that you need to know how to satisfy the small amount of new users in a beta test when working with networks of people. Her approach is to satisfy the small, before organically growing to the large. This approach has been proved a success from the monster his such as Google and Facebook, so she can’t be too far wrong.

She also made it clear that if you are working at the intersection of two industries, then you can quickly become an “industry expert”, which is where Robin has often found herself, working with hi-tech, automotive, environmental and networking solutions.

Her opinion on making sure mesh networking devices become successful and well accepted is to integrate them into other technologies that are well maintained and required. That way the mesh network will be kept running because it is necessary by another solution, such as within cities for use in congestion charging.

A sound piece of advice is to try and hire people who have an “I can do that attitude”, this generally means a team of entrepreneurs. I can see issues with this, if there isn’t a common focus of the company, and everyone is working towards the same goals. Along with this attitude another thing that you usually can group entrepreneurs under is the thinking of, “It’s always looking up”, a great way to think about things, obviously as long as it’s actually looking up!

When asked how to go about asking people for advice, and to be on your board as a new entrepreneur, Robin suggested that successful people generally come from a place where they feel people have helped them, so are will to help others be successful too. A great way of thinking about things, and from my experience this is commonly true.

Robin was a great speaker, and we had an interesting discussion with her. It was also good to be able to debate some of the issues that she arose, and hear how she defended her position. I think Robin is doing a great job, and wish her all the success in the future. She really is changing the way people think about transportation and the environment at both the highest and lowest levels in the world.

MIT Entrepreneurship Center

It was interesting to visit the MIT Entrepreneurship center as I could see how much weight MIT has put behind its entrepreneur focus. It’s not surprising they are considered one the best colleges for entrepreneurs, especially regarding their 100K competition when they have a center and dedicated staff at the university, even if it is only run by 5 strong full time team. The center being outside the remit of the other schools seemed to be an important aspect of the success, along with the strong alumni network MIT has.

We had an interesting discussion with Bill Aulet regarding business plans and how they could be successfully implemented as a PowerPoint presentation. If you are able to create a 10 slide version of your plan, that acts as a plan of execution for your business.

He also went through the areas that a 100k plan would be marked on, in the areas of opportunity and risk. These are:
• Market
• Execution
• Team
• Plan
• Competitive Advantage (tech)
• Financial
• Other i.e. Green energy, political implications (where appropriate)

Further details on this were that the market needs to be broken down into manageable steps, rather than looking at the market as a whole. The example was you can’t just say you’re going to sell cars to 1% of the market, need to look at it on a much smaller scale.

Gross margin is an important consideration, and something that hasn’t been touched on yet. Bill said that you need to be careful when presenting the margin, near to 10% is what a distributor has, and 90% is Microsoft, which is very difficult to achieve and would be hard to convince a panel, or VC that you could work with this percentage.

Competitive advantage is usually thought of as tech, but can also be critical mass of customers, or even having customers locked into your system. Having the best technology is not always necessary, and often overrated by the entrepreneur. Speaking of VC’s he warned that all they care about is Internal Rate of Return (IRR), it’s what they are rated on and the most important figure to them.

Once you have a plan, it should be signed by all management so that they are all in agreement with its contents, and are all dedicated to its success. The plan needs to convince a number of people that it will be successful. Intially this is you, then your team and also your customers. Finally your mother, meaning it should be easy to understand. At all times it should stir up passion and excitement, only then will it be ready for others to look at.

An invention on its own is like counterfeit money, it’s not worth anything until it’s commercialized!

Innovation = invention + commercialization

Even if there is no competition in the market, then you need to explain why. If there is no competition, this will flag warning messages in anyone’s head looking at the plan. It’s best to frame it as, even though there is no competition right now, you recognize there will be in the future. It’s also a bad idea to compare your new product with a product a competitor already has on the market, they will often have new products with your functionality in the works that you don’t know about. A better way to look at them is to find out what they are competing on, and differentiate yourself that way.

One thing I was disappointed with regarding the center is their concentration on graduate and PhD students for the programs and not undergraduates. One thing I have learnt since being on this fellowship is that you can never start too young in teaching entrepreneurial practices and if you are introducing the practices to school children, then the opportunities should also be there for all students. It was also interesting to hear that they haven’t achieved any increase in students that wish to pursue entrepreneurship who finish at MIT compared to when they start.

I don’t want to sound negative, but have a few other observations about the center. They rely on donations from local businesses and past students for funding, which account for 70% of the income. This doesn’t seem like a sustainable business model to me, and could suffer in the future. It also appeared that the classes were generally given by lecturers at the university, and they rarely used active businessmen.

It was great to hear from Bill again, he really is an inspiration and has so much knowledge and insights into the process we are all going through its scary. I would jump at the opportunity to spend more time with Bill and his team.