10 Key Questions To Address: Business Plans – How To Start A Business

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Complete Video Transcript

0:04let’s talk about business plans and
0:06and most notably what even the use a business plan for
0:09a business plan is a a good
0:13document and that good process to go through to lay out your thinking about
0:17the business
0:18but most notably that business plan
0:21is going to be a sales tool for you most of us
0:26are going to use a business plan to raise money
0:29to get partners are to get people interested in our idea
0:35and I know there’s a lot of thought I’d like what goes in the business plan has
0:40to be done
0:41they’re basically 10 he questions
0:45you have to answer in a business plan and you wanna do these
0:49as to the point but thoroughly
0:53as possible first of what is the product or service
0:58how many you’ve been in the following situations:
1:01somebody’s talking to you about their idea for their business
1:05they’re showing you their business plan its 5-10 minutes into it
1:09and you still had no idea
1:12what their product does or what
1:16their businesses if you can’t explain
1:20your business concept to me and
1:2330 seconds or less and have it also not explain to me but explain to a fifth
1:30grader
1:30such said it was simple and straightforward enough that fifth grader
1:34could explain it to another adult
1:36and that that second adult understand the concept business
1:39it’s too complicated or you’re explaining in the way
1:44that’s too complicated the first most important thing to do in your business
1:48plan is
1:49what is the product what is the service
1:52what is Docstoc Docstoc is a website
1:56that help small businesses
1:59by getting them access to the documents they need to start and grow a business
2:05net things like legal contracts business forms financial models
2:10and then other resources like videos and tools that you need to start and grow
2:14business
2:15that’s it that stock sockets very straightforward
2:18explained in 30 seconds alas even if you’ve got some questions about what the
2:23product doesn’t want it is you pretty much understand
2:26what it’s all about and you’ll know what fall questions asked to clarify what’s
2:30going into it
2:31what is your product or service describe it clearly
2:36now axed what is its unique value proposition
2:39why is your product or service different or better what your business
2:43i’m an attorney I’m a business turney helping formations great
2:47wife I use you verses the 500 the business attorneys
2:52better agreement by the same service what makes you different or better
2:56well I’ve worked with 400 clients in the last year
3:03I’ve helped incorporate thousands of businesses
3:06i’ve seen every potential situations and they could go all wrong or not
3:10I’m gonna make sure to give you the best service be the most transparent
3:14at fair clear rates okay I get it
3:17I see wire different a better what’s the market opportunity
3:21so what’s the problem that you’re solving how large is the market that
3:26means
3:26how many total dollar spent into it that’s a really important question if
3:30you’re trying to raise venture capital
3:32won the first things I venture capital wanna see
3:35it again we’ll get into it exactly the difference in venture capital it
3:38happened passers
3:39is how many total dollars are spent into this market
3:43how fast the market growing
3:46rights are we talking about mobile devices that’s a huge the fast-growing
3:50market
3:50and who’s the competition how do you make money
3:54make sure you can be able to explain very simply
3:57and clearly how you make money is a subscription service
4:02you charge one offer product are you based on our lives is at a premium
4:05product
4:06how do you make money now axed
4:09what is the strategy strategies answered very simply by saying
4:14what’s the long-term vision first of what is it that
4:17we picture being in five years now 10 years now fifteen years now
4:22it’s my goal on intention that Docstoc is the pre near-death nation online
4:27for every small business to go to you to get help with the resources that they
4:31find most valuable
4:32that my long-term strategy but what are your three six nine and twelve month
4:38goals where the milestones that you wanna hit and those periods of time
4:41where the key metrics you’re gonna get
4:44that’s that second part strategy how do you sell or market your product or
4:49service
4:50don’t take for granted that you’re going to build something you’re gonna
4:52customers
4:53you can open up a corner shop people are gonna come you can provide a service
4:58like therapist pea pods gonna want to work with you
5:01how are you gonna get people wanting your product and service
5:06how much capital you need to raise so what
5:10amount a capital D need to get to get to profitability in your business
5:15or what I’m not a kappa dude you need to prove how certain amount metrics
5:1910c raise more money if your gonna have a business its liquidity business
5:23remember
5:23lifestyle business we want to profit want those profs a poor lifestyles
5:28liquidity business we want to show enough growth we can have somebody by
5:31that company from us
5:33or potentially take it public who’s the management team
5:37and more importantly why is your background and why is your skill set
5:42uniquely qualified to start this business
5:46let me ask you if we were going right now we need to raise a hundred thousand
5:50dollars to start an internet business
5:53are you gonna want somebody are you gonna want somebody that started
5:57restaurant businesses are you don’t wanna and you had to give
6:00a hundred thousand dollars your own money let’s say we ought to nine dollars
6:03in the bank
6:05congratulations to all ten million dollars in the bank and you’re gonna and
6:08that’s a hundred thousand dollars in new business
6:11and you invest a hundred thousand dollars an internet business
6:14do you want invest that hundred thousand dollars and Summit start a restaurant
6:18business successfully
6:19this morning at this all you want invest a hundred thousand dollars a month start
6:22an internet business
6:23successfully in the past how’s the background
6:27the management in uniquely qualified for that business
6:31number nine where the projected financial company
6:34how much revenue are you gonna make wine to three years out
6:38typically I would say just the finances for three years out anything more than
6:41that
6:42is you’re already throwing a dart
6:45in the dark doing financials but to do it 13 years out
6:48is most often pointless
6:52but what for the next year especially for the next year
6:55that’s how you can operate your business what do you think you’re gonna spend
6:59where those expense gonna come from what do you think you’re gonna make
7:03would you be profitable we need more capital awesome point
7:07and then finally what’s the preliminary evaluation and your company
7:11mean if you are going to raise money
7:15how much would you give up for certain amount a month
7:19so for example if you wanted to raise
7:23ten thousand dollars for your business let’s say
7:26you just wanna sell a product online and you you found a great place
7:30we’re gonna sell laptop covers our business call laptop cover incorporated
7:36and you we found a great place we can soar somebody’s laptop covers for
7:42two dollars in a variety of interesting colors we want to sell them for 10
7:46you need ten thousand dollars and working capital to buy these in your
7:49gonna
7:50you already have a website up using the money to buy the laptop covers
7:54and you came to anyone he said i any ten thousand dollars
7:57what percentage have your business would you be willing to give up
8:01if you gave up 10 percent if your business then you have implied
8:05evaluation
8:07have a hundred thousand dollars in fact
8:10want to raise the money you have diaries 110 thousand dollars but
8:15if you’re saying that you’re gonna give up 10 percent in your business for ten
8:17thousand dollars
8:19your saying that the value my business at this moment
8:23is a hundred thousand dollars and there is no real
8:26that the only value your business is like everything else will supply and
8:30demand for the price your product the price their products for what people
8:33willing to pay for
8:35the Prada valuation if your business is what people are willing to invest in
8:39so based upon all these other things like how much experience do you have
8:44what kinda product if you built for example if I were to go start a business
8:48versus probably anyone have you in the internet space
8:52I could probably get a better valuation for my business right up front because
8:56more credibility and my background around sorry internet businesses
9:00if one of you has a really successful track record signing restaurant
9:03businesses
9:04you giving it about that evaluation for a restaurant business be raising money
9:07then I would be it these are the 10 questions
9:10that you most simply want to consider if you address eating these ten questions
9:15in your business plan you’re going to be successful