This next step is the marketing plan.

Logically, your CMO or VP of Marketing would be in charge of this effort but in many startups you don’t have someone in that position so it is probably you with the ultimate responsibility. So my dear reader, I am here to the rescue to guide you through very important part of executing your overall business plan. Each one of these headings will generate one or more posts so here is an overview of what you can expect.

SUMMARY

Describe product or service. Emphasize unique or innovative features and/or protection by patent,
copyright or other legal means.

SITUATIONAL ANALYSIS

Situational Analysis lays out the overall marketplace you are competing in and the various environments your business will have to address.

The Market

The market is a description of your total potential market (your potential customers). It will also address how your product/service satisfies the needs of this market. You will also need to describe the particular customers that you will target. This includes the size of (1) total potential market (number of potential customers), and (2) your target market. Here you will have to support your estimates with factual data. It must also discuss the growth potential of (1) total potential market, and (2) your target market. You will have to look at local, national and international markets. Support estimates with factual data. Lastly will be the market share you expect to garner.

The Competitive Environment

Here is where you will identify major competitors: name, location, and market share. You will also compare your product/service with that of your major competitors (brand name, quality, image, price, etc.). This leads to you having to compare your firm with that of your major competitors (reputation, size, distribution channels, location, etc.). You must address how easy is it for new competition to enter this market and what have you learned from watching your competition. Some important elements to include are how competitors’ sales are increasing, decreasing, steady and why.

The Technological Environment

Since every company these days incorporates some type of technology to be competitive, how is technology affecting this product/service? How soon can it be expected to become obsolete? And is your company equipped to adapt quickly to changes?

The Socio-Political Environment

One area that many marketing plans forget to address is the outer social-political environment that may impact your market potential and competitive edge. You will have to describe changing attitudes and trends plus how flexible and responsive is your firm. This will also include a list new laws and regulations that may affect your business an what might the financial impact might be.

Other

This section is open for other situational factors that will affect your marketing plan.

PROBLEMS AND OPPORTUNITIES

This is a wide open field and specific to each business. Here you will have state each problem or opportunity and what you will do about them.

OBJECTIVES

The objectives section are the milestones that you will achieve as you execute your business on a daily basis. You must state objectives in precise, quantifiable terms. (e.g. “To obtain a sales volume of 3000 units by the end of the fiscal year.”)

STRATEGY

At the high level, the strategy section addresses wow will you reach your objective? (New market penetration, expansion of market share, entrenchment, etc.). This will also address how you have taken into account the previously mentioned problems and opportunities, and the potential reactions of your competitors.

ACTION PLAN

With all goals in sight, there must be an action plan to meet those goals and objectives. How will you implement the above strategy? What is the quality, branding, packaging, modification, location of service, etc? How will you price your product/service so that it will be competitive, yet profitable? What will you do for promotion/advertising? What are your selling and distribution methods? How will you service the product?

FINANCIAL DATA

All of your plans must be supported by financial data that ties into the overall business plan financials. This includes sales projections for the next five years (optimistic, pessimistic, realistic), a Breakeven Analysis (See Appendix B), and monthly cash flow for Year 1, quarterly for Years 2 and 3.

APPENDICES

As in the business plan, the appendices are the data that would bulk up the core plan too much but are important to support your information.

Appendix A - Market Share

This includes market share data tables and more detailed competitive analysis data.

Appendix B - Breakeven Analysis

This is in support of the financial data section and shows how with your objectives met, when you will breakeven with the revenue goals and expenses detailed out and tied with the various parts of the action plan.

Appendix C - Cash Flow

As important as when you will break even, you must be able to show how, on a monthly basis, you will manage the cash flow to support the business and not sink it from an overly ambitious strategy and action plan.

Do you have any experience writing a marketing plan?

If any of you have experience writing a market plan, I would like to know what elements I might have missed and any war stories that will help other entrepreneurs learn from your experiences. Please use the comments and let’s get this conversation going.

So I started thinking about what smaller bits of advice I could organize in a great ongoing series of posts. This is where I came up with “Rules for Entrepreneurs”.

These rules will range from how to hire lawyers, leveraging PR the right way, setting up your first site, how and when to hire your first sales person, putting together your sales/venture pitch, etc.

I would welcome from all of you requests for how-to’s that will help me provide you and the rest of Venture Files readers with the rules that will guide you through building a successful company.

The origins of this post were motivated by Seth Levine’s post today How to get a job in Venture Capital revisited his earlier post, How to become a VC and it seems to hit on the same advice that I got from my VC friends in the business.

The gist of it seems to revolve around either going to a top B-school, being a banker or consultant, working in a startup or starting one of your own.

So instead of telling you how to become a VC, let me take a different angle and tell you why you don’t want to be one.

Everyone acts like they want to be your friend but all they really want is your money

When you are an entrepreneur you go to networking events in the hope of meeting investors, you leverage VC networked lawyers and accounting firms to get you introductions. What are you there for? To get money. As a VC you are just on the other side of the table and now when you go to dinner parties you are faced with the “Doctor’s dilemma”. That is when they find out you are a doctor and then they tell you something hurts them and expect a free diagnosis and prescription write up. As a VC you might suffer through people with “hey, I have this business looking funding” or “I have a really great idea, would you fund it?” crap. Just tell them you sell insurance and they will stay away from you.

You get stuck in board meeting hell

As a VC you will sit on boards to meet with the company on a regular basis to see if they are meeting their milestones and vote on critical issues (i.e. stock options, new key hires). The only problem is that this most of your interaction with a company and as a former entrepreneur you will have a tendency to want to be more involved. You can’t. You must keep the deal flow coming through for the firm to make the investments that will create good exits for great payoff to the fund’s limited partners. Yeah, I think that kinda sucks too.

You only really work day-to-day with a startup when it is having trouble

As I mentioned above, you are really only working with them in a board capacity when things are going well. When things start to go bad you have to spend more time and usually have to be the bad guy. You might have to kick out the founder, recommend budget cutting strategies, etc. Yep, that sucks too.

You have to read the most insane business plans

The average VC firm sees about 2000, that’s right 2000 business plans a year. Do the math. If you are an associate you have read around 50-100 per week depending on the size of your firm as an associate. You have to filter the crap from the interesting and then further find the fundable in the interesting ones. Many people blindly send plans that don’t fit the investment size or focus of the firm so they are immediately tossed. Still, you have to find the ones that are good and then have a phone conversation with them. If the chat goes well, they will come and pitch you so can report to the partners about the ones that they should really sit in on. If they end up sucking it reflects badly on you.

Do you like Excel?

When you join a firm as an associate you are analyzing deals from every perspective tearing apart an entrepreneur’s business model to see if it is actually not full of shit. You are also looking at it from various bad-to-great scenarios to understand the risk exposure the firm would be taking in the deal. I hate excel and the thought of living in it just makes me shudder.

You have to work insane hours to close a deal

You work insane hours as an entrepreneur but there is a long term payoff that can be huge. To get a deal done especially if it is syndicated or there is competition from other firms means you have to work insane hours to get it closed. If you don’t you risk losing the opportunity and looking like a lazy idiot to the partners. What is the upside? Maybe a bonus when the fund exits? Maybe. At least as an entrepreneur you can have a little more control over getting a big pay day.

Limited Partners are worse than investors

Investors in a startup expect risk and are betting on you to succeed. They hedge their bets and usually 7 out of 10 deals funded crash and burn. The remaining 2 get a good exit and the remaining one you hope will be the next google. Limited Partners have a long term outlook (7-10 years) for a fund to complete. But boy do they expect results. You might return a solid 20-30% return which is fantastic for any other investments but they might just bitch. Especially if the previous fund had better returns. Yeah…I would love to have that to deal with.

Are there any VC’s in the house?

Many people read the blog and hopefully there are some who are VC’s and could comment. It would be especially great if there are a few out there that have been in the business and left it.

When you work at a big company you are kind of trapped with the corporate standard they push upon you. As an entrepreneur, your business card is your brand, your elevator pitch and your first impression. So WHY OH WHY do people not take enough time or invest a little money in creating good ones.

Sure, some people think they have great business cards because they are more about creating memorable impact and not communicating any information but they have it all wrong. There are certain things you MUST HAVE on a business card and certain things you MUST NEVER HAVE. So here we go…

Have an Industry Relevant Design

Now I work in the tech industry and there are a broad spectrum of business card styles in just one sector. The design firms have more funky, fun designs because they have to communicate they are hip and creative. The startup firms are generally all over the board because some people spend money and others don’t which is just stupid since many people don’t know who you are. The big government contractors are boring cards but that is to be expected. Law firms and financial services companies should like clean and professional to show that they somewhat conservative and will treat you well. So the lesson here is keep within the expectations of what your competitors are doing but do it with a little flair if you want, just not overboard.

Branded/Corporate E-mail Address

Nothing says “amateur” than using a Yahoo/Hotmail/AOL/Gmail e-mail address as your main address. I mean come on, a domain name costs only $10 these days and usually a hosted e-mail account is $1.99 more. The biggest perpetrators are usually those trying to be “consultants” but have a day job and this is their side thing or they are just starting out and haven’t talked to one person about marketing.

What does your company do again?

Business cards are supposed to have the usually information - name, address, e-mail, title, phone, company name. To make some real impact, you should use the space on the front of the card to have a single statement below your company name that is your main marketing message. For example “Next Generation in Sales Software” let’s me know you are innovative, provide sales software and are a tech company. Simple.

You can also use the back of the card for this too but don’t jam it full of sentences or a big paragraph. 2-3 sentences at most and it should build on the marketing message you have on the front. You can also use the back for the marketing message itself to change it up a bit.

No Tiny Print

This links to “what do you do” section above. People try and put alot of information on a business card but for the love of something good and sweet, don’t try and think more is better by using a small font. We need to read it from first glance and not grab a magnifying glass. 11 point font at a minimum, 12 and 13 is better.

No Folded Cards

Yeah, they look neat but they are a bitch to scan. I find myself ripping that half off to get it through the scanner. If you need to say something else, use the back of the card.

No “Captain Obvious” Statements

As I stated above, we want a good marketing message to remember you and know what you do. That doesn’t mean putting stupid statements like some of my favorites - “I love leads” or “We sell real estate”. Really? I love leads too and if you have to tell me you are begging me and I won’t give them to you. Really, you sell real estate? I couldn’t gather that from your company name “XYZ Realtors” so you must think I am stupid. Into the trash you go.

No “Do-It-Yourself” Business Cards

Next to the AOL/Yahoo/MSN e-mail is doing the business card yourself on the laser printer or worse, the ink jet printer. Using those perforated cards that come in a sheet just look horrendous and screams “I DON’T CARE ABOUT MY IMAGE, BUT PLEASE HIRE ME ANYWAY”. Not. The worst offenders I have seen are the startup government contractor/outsourcing firms sucking off the GSA contracts as a sub of a sub of a sub.

No weird or stupid titles

I know, I know titles are boring and don’t matter much in the scheme of things when you are an entrepreneur. You are doing everything. Do you have to jam it my face that you are the founder? CEO is fine and enough. Chairman? Chairman of what? Your 1 person company? I am so impressed. Not.

Then there are the “I am so creative that no titles out there fit me”. I have seen “Code Ninja”, “Code Poet”, “Fearless Leader”, “Marketing Overlord”, “Marketing Evangelist”, and my favorite “Voice of Reason” — see Technosailor for that one. And don’t even get me started on the cards from people that work at Yahoo!

Get some focus dude…

Don’t jam three businesses into one card. We want to know what you do in VERY BRIEF statement or two for that specific company. If you have multiple ventures you should have multiple card. ‘Nuff said on this one.

I Can’t Write on Glossy or Weird Hippie Cards

When I meet you I am usually trying to understand what you do and how you might become a client, a partner or a vendor. After I finish talking with you I usually write a note on the back of the card so I can keep the e-mail to you in context and have something to discuss. The glossy cards, and I have been guilty of this one, don’t work for writing on and they usually cost you more anyway. The other side of the spectrum are what I call “the hippie cards” and are made of some weird “save the planet” material that is impossible to write on as well. Stick with normal paper, it will serve you well.

But you really want a wicked cool and weird card…

If you have an urge to create a funky business card, make it your second one to have impact or be gimmicky but have the main one as the one people will scan or save to contact you. They might save both but at least they have the one that they will scan and save for later.

So what are your “bad business card” experiences?

Since there are so many bad business cards out there I couldn’t capture the sum of things that you my reader have probably seen. Please use the comments as your place to be funny, trash bad business cards and most of all call people out on their bad business card protocol.

So what exactly is in the appendix section of the business plan?

In short, it is the kitchen sink of things that are relevant to your business plan that add value for the reader. Here is a short list:

• Photographs of products, equipment, facilities, etc.
• Patent/Copyright/Trademark Documents
• Legal Agreements
• Marketing Materials
• Research and/or studies
• Operation Schedules
• Organization Charts
• Job Descriptions
• Resumes of Key Personnel
• Additional Financial Documentation

Photographs of products, equipment, facilities, etc

Here you want to include scanned photos of your physical products (if you have them), equipment you have that is important to the function of the business and the facilities you have your company. Facilities include production plants, corporate headquarters and any branch offices.

Patent/Copyright/Trademark Documents

In your business plan you discuss the value of your IP and this is where you include supporting documentation including patent applications and any copyright/trademark filings that support your statements in the business plan.

Legal Agreements

There are many legal documents you have for the business, but the most important would be your operating agreements, shareholder agreements, stock option plans and critical contracts that you mention in the business plan.

Marketing Materials

This is essentially your collateral materials that you use to sell your products/services. It should also include screenshots of your web site.

Research and/or studies

Here you can include any white papers you have written to cover research you have conducted, grant studies you have completed and any additional marketing research you have completed to support the case for your business.

Operation Schedules

Whatever you are creating there must be a schedule behind it to complete the product and/or roadmap it out. If you are building hard goods there are facilities operation schedules to meet production forecasts. If you are building software products you will have development schedules to bring the product from prototype to beta to production. That will be critical to match the forecasts in your business plan that you have projected for launch and subsequent customers coming online with the system.

Organization Charts

You might have put a small chart in the management section of the plan but this is where you can expand on the entire corporate structure including identification of key hires throughout your business plan’s timeline.

Job Descriptions

Linking to your organization chart, you will need to write job descriptions for all of the staff, current and future, in your company. This will help you identify any overlap that might be there but it will also show the reader that you have thoroughly thought out who needs to be working for the company and what they will be doing for your business.

Resumes of Key Personnel

Since you put smaller bios of your management team in the management section, this is the place to put the full resumes of the team to back up their bios and allow readers to get the full background of the team to feel confident in their inclusion in the business.

Additional Financial Documentation

Beyond the standard documents in the financial section (cash flow, balance sheet, income statement) you might want to include tax returns for the business for the last three years (if you have them). This should also include key elements in your financial model like the revenue sheet to show how you will met the projections you set out. You should also include expenses and salary costs so that readers know you are market competitive but not going crazy (as in too high or too low) to support the numbers you have projected.

Starting our next series - The Marketing Plan

Our next series will dive into a good supporting document for your business plan but it is much more internal. This is a critical document that will guide your sales and marketing function to create the right materials and identify the best campaigns for maximum customer acquisition. We will also discuss setting up your sales processes and sales organization to be the most effective.
If any of you out there have written a marketing plan I would love your thoughts, opinions and war stories to help our readers looking for advice and guidance in this area. Please e-mail me at steven_fisher at yahoo dot com.

After the bubble burst most people were just trying to hold on and all that you had a choice between in the DC area were NVTC (Northern VA Tech Council) and Potomac Officer Club events. NVTC was very government focused and who mostly showed up were service providers (I have the 100’s of insurance and lawyer business cards to prove it). POC events were big events with well known people but not alot of good networking.

One good networking event I liked was the Tech Prayer breakfast but that was only once a year. What most of us were left with was going to conferences, usually not here, to get our networking on and find fellow entrepreneurs and real innovative thinkers.

Lately, there has been a change in the winds here in the DC area. With events like PodCampDC and Social Media Club’s events we are starting to see our cutting edge tech scene finally re-emerge. Last Thursday night it was totally confirmed with the TECH Cocktail DC event. It was held at MCCXXIII (1223) in DC. A swanky place that is over-priced for my usual weekend partying but this event had cheap drinks (thank you drink tickets) and about 300 people.

Below is a picture of the scene at the height of the evening.

While there have been many events that have drawn 400 people, this was different. Almost everyone was doing something startup related that was really cutting edge. There were social media people there (Technosailor and me included), innovative startups and actual investors looking to network.

There were also a great group of sponsors with great products to demo. Here is a great list from Jimmy over at EastCoastBlogging:

AwayFind - a product aimed at helping combat the email problem by letting your contacts get in touch with you via an online form.

iGala - a digital photo frame with a touchscreen interface that connects directly to Flickr and Gmail to stream photos to the frame like a slideshow.

Loladex - offers local recommendations from your trusted network of Facebook friends.

Odeo - launched a new beta verision which offers both search and personalized content (audio and video) recommendations.

Voxant - a free licensed content offering for publishers which offers a pageview based revenue share to anyone that embeds the content on a their site.

WhyGoSolo - a new social networking site aimed at helping you to create spontaneous new connections so, as its name implies, you won’t go solo any longer.

A huge amount of thanks go out to Frank Gruber and Eric Olson who do the TECH Cocktails around the country and they need to do it more than once a year here.

The vibe around this region is changing and since we will never will be Silicon Valley and never want to be, it is fantastic to see that there is a refreshed ecosystem of entrepreneurship here in the region.

Photo courtesy of jgarber

Editor’s Note: Some comments don’t seem to apply to this post as viewers of a show I was on were instructed to leave comments on this blog to get an invite to BrightKite. These comments will be approved but do not necessarily go with this post. Sorry!

“Greed, I mean Green is Good”

CNN, the New York Times, Business Week, Advertising Age, “Good Morning America,” the Sundance Channel, Reuters, the Discovery Channel, Marketplace radio, and a slew of local papers. Newpapers? You kill trees to create a huge insert about Earth Day. Is that not the stupidest thing you have ever heard. And a surprising number seem to have some variation of the same two questions:

“Is all of this focus on the greening of business merely a fad? When will the bubble burst?”

Green tech and marketing means green dollar signs for companies like GE, Disney and BP. NBC has created this load of crap called “green week” for their TV shows which is a thinly veiled attempt to sell their “green” products sold by their parent company GE. Disney announced a new “green movie” division which will capitalize on people’s concern with the environment so they can get more ticket revenues and DVD’s sold. BP is all about alternative energy these days and while they have been the most progressive when it comes to solar and natural gas they are really doing it to hedge their position as oil prices rise and people are ready for an alternative that must come within the next five years. I mean have you filled your tank lately? Bought a loaf of bread? It is crazy and things definitely must change.

There are motivating factors that support the argument that “Green is Good”. Here is the bullet list from a post by Joel Makower:

1. The problems aren’t getting any better.
2. The political will is finally emerging.
3. Consumers are waking up.
4. The supply chain is gaining power.
5. The environment has become a fiduciary issue.
6. The bar keeps moving.
7. Companies are moving beyond “sustainability.”
8. More companies are telling their stories.
9. Clean technology is changing the game.
10. There’s money to be made.

The bubble is growing

I am the farthest from a bleeding heart liberal, tree-hugging, save the polar bears person you will find. Although Polar Bears are just so darn cute I am not turning my air conditioner down during a heat wave in the DC area this summer to save them. I am also not a cold-blooded oil junkie who thinks that this global warming thing is a myth. I just think that the real intentions of being concerned for our environment has caused the investment community to pop its head out of its butt and see greedy potential to fund investments in everything “green”.

Since most of us survived the tech bubble we have learned our lessons and despite the Web 2.0 wave causing a mini investment bubble, we still have kept most of our sanity because the IPO market really hasn’t returned and the M&A wave is slowing down too. Most who couldn’t get jobs when the tech bubble burst left the industry and you guessed it, become real estate agents and mortgage brokers. As some people bounce from bubble to bubble, we will probably start seeing “Environmental
Consultants” and “Green Advisors” to, and pardon this one, “advise and recommend to companies how they can become more green and offset their impact on the environment”.

With the rising price of oil we are near a tipping point where many technologies are on par with the cost of traditional fuel so it will start to make economic sense in some cases. Where it doesn’t make sense is to stop growing wheat so you can grow corn for Ethanol (which takes 2/3 of a gallon of gas to produce a gallon of ethanol) causing wheat and rice shortages around the world. Right now in developed nations people spend 10% of their income on food and in developing nations it is around 80%. We have enough food to feed the planet but we just can’t afford to get it there. If we start diverting resources in the name of “green living” to make ourselves feel better the ramifications might be worse than we could imagine.

Oh crap, the Government is getting involved

The state of the government getting involved is a mess. I think Thomas Friedman sums it up well. “Some lawmakers are pushing corn ethanol from Iowa, either because they hail from that area and are looking to give more welfare to farmers by wasting money on an alternative fuel that will never reach the scale of what is needed, or because they plan to run in the Iowa caucuses. Others are pushing huge subsidies to turn coal into gasoline, because they come from coal states. Those who don’t come from Michigan want higher mileage standards imposed on Detroit, while those who come from Michigan prefer to continue their assisted suicide of the U.S. auto industry by blocking tougher mileage requirements.”

So you ready to call me “chicken little” yet?

You really call this “Green Investing”?

In the venture community we are seeing new funds popping up dedicated to “Green Investing” which in a diversified portfolio is good for funding innovations that will only help our world. What is really scary is many funds without the proper background to invest in this sector are jumping all over anything with buzzwords like “alternative energy”, “biofuels” and “eco-friendly”. VC’s like John Doerr cry when they talk about the environment and are dumping millions into companies that do things like nano-solar and grid optimization technologies. Hedge funds like Winslow Green Growth Fund are seeing their portfolios transform with the rush of new companies and new investments.

I hear a popping sound….

There are two popping scenarios:

1. Green will index within the mainstream and become ubiquitous.
It sticks. People keep pushing corporations to deeper levels of sustainability. Greenwashers fall on their face because it’s an unfulfilled promise, and then they mean it and real change happens. Green becomes ubiquitous. Smaller, plucky green companies struggle to regain any competitive advantage. When everything is green, green means nothing. (The study of green language is already there.)

2. It’s a fad and will vanish back to the margins of our society.
Green Fever goes away because it is a trend, a fad. News stories drop off, the chasing arrows shrink smaller on the back of packaging again, people stop bragging that their letterhead is 100% FCS Certified and Acid Free. Some small vestiges will still remain, and progress will have been made. New products were launched and the consumers will be more aware. But the trend died… popped.

Final thoughts…

I do believe we are economically in trouble as a country and I do believe that we are beginning to see the beginnings of a “green bubble”. However, as with bubbles like the tech bubble we saw massive innovation that benefits us to this day. So while there will be many bull**it artists and charlitans convincing investors they can solve the planets problems there will be innovation that will benefit us and the entire planet. I would just caution people on two things - don’t invest in every “Green IPO” when the fundamentals don’t work and don’t transfer your career into this field unless you are already in it or willing to passionately stay in it the rest of your life. We don’t need armies of unemployed “green consultants” trying to come back to tech in five years when the bubble bursts, because it eventually will.

Please leave your comments below, I want to hear from the evil oil people, the treehuggers and especially the Polar Bear lovers.

Despite the work you put into creating a stellar business plan most investors will read your executive summary first and then dive right into your financials. Their reasoning is to see how well you have thought out your business model, when you will reach profitability and with a proper exit will it provide the return on investment they are looking for.

So what are the core elements of the financials section?
The financial plan section of the business plan consists of three financial statements, the income statement, the cash flow projection and the balance sheet and a brief explanation/analysis of these three statements.

The way I have done most of these in the past is to build my financial model to detail the relevant expenses and revenue streams to automatically create these statements but also allow me to model the business and change things based on various assumptions.

When it comes to expenses think of your business expenses as broken into two categories; your start up expenses and your operating expenses. Startup expenses are all the costs of getting your business up and running go into the start up expenses category. Operating expenses are the costs of keeping your business running. Think of these as the things you’re going to have to pay each month. Your list of operating expenses may include salaries (yours and staff salaries), rent or mortage payments, telecommunications, utilities, promotion, loan payments and office supplies.

That is just a partial list of things to get you started. Your operating expenses are the costs of what it will take to keep your business running each month. This is also called your “burn rate”. If you take your startup costs and six months of operating costs that is the general rule in how much money you will need to get your business going long enough to get revenue coming in to get you cash flow positive.

Beyond the core financial statements
Many startups can take longer because they have development and staff costs that are high and have such an extensive burn rate that they need outside investment. This is why your projections and return on investment are so important for others to understand what they are getting themselves into. About.com sums it up nicely with what you will need:

• A short-term projection of the first year, broken down by month
• A three-year projection, broken down by year
• A five-year projection. Don’t include this one in the business plan, since the further into the future you project, the harder it is to predict; however, have it available in case an investor asks for it.

Scenarios
Another thing you must consider in your financials is the case of scenarios. Scenarios are projections that show what the business would look like if certain things happened. Things like no customers for a while vs. a quick rush of new customers, rapid development costs vs. slower development costs.

You really only want to show two scenarios

Funding Requirements
For many of you going out and getting external funding will not only be required at some point it will be mandatory in order to meet the goals you have set out to achieve. From your financial model you should write in your summary and be able to show on your projections the following:

• Funds required to start the business
• Anticipated funding over the next two, three, and even five years
• Use of funding
• A timeline for funding

Good link love
Here are some excellent links on financials:
Michael’s Big Idea
SCORE Templates
About.com - Financial Projections

In our final section, Part 10 - Appendices, we will discuss all the stuff you would love to have put in your business plan that would add value but made it a 160 page plan instead of a 25 page plan. These documents are the things that will be critical as you move through the review and due diligence process with potential investors.

If you have thoughts on what you would have done with your financials and what advice you can share with others please leave it in the comments.

In the first part of our interview we talked about what WhyGoSolo is, what makes it unique, its roadmap and revenue creation. Here is the second part of our interview:

1. How many employees do you have at WhyGoSolo now? Is it important that they all share your entrepreneurial spirit and drive? How do you find that in new hires and keep that entrepreneurial energy alive?

We have 4 “employees” working with on WhyGoSolo. None of them are getting paid in dollars so I would definitely say “heck yea it’s important they have the entrepreneurial spirit and drive!!”. They are doing the work they’re doing and taking risks because they believe in the potential of WhyGoSolo and the team they are working with.
Yesterday, Doug our VP. of Sales/Biz Dev “guy” (titles are still a little loose at the moment) made some calls for some research we’re doing in building our revenue model and he spoke to quite a few sales people. One woman he spoke to has offered to donate her time to help us – she wants to make some calls and sale WhyGoSolo for us.
I love that!! You know you have something exciting and fun when people want to donate their time to help out. Lets you know that when we get funded they want to be the first hires – the people who have stuck around and are joining us now are looking to be part of something that will soon explode. We let their guts decide. We also only talk to the best, smartest and most passionate. That keeps the entrepreneurial energy alive.

2. What are the most important elements for a successful startup company?

It starts with the Vision. You must have a Vision that you can build a strong business and team around. The Vision includes having a solid market, revenue streams, exponential growth potential and passion/excitement/love for what you’re building.
Next is the team – you bring the best and most passionate of each professions you need together and you give them the room and tools to shine.
I hate to say this, but I have to admit that proper funding is also an element of a successful startup. We’ve been bootstrapping for over a year and we have the Vision, a strong business concept and a growing team, but we’re extremely limited in what we can do because of resources (dollars)

3. You are self-funded which is poses a different set of challenges versus those who get money from the likes of Sequoia and Novak Biddle. Can you give us a bit of detail on your approach to managing cash flow while trying to grow?

Haha!! What cash flow? There is no cash flow. Everything is out of pocket and we’ve kept our expenses to the bare, bare minimum. I’m surprised we’ve spent money on business cards. Our biggest expense is hosting. Everything we’ve done has been through word of mouth, going out and talking about WhyGoSolo and leveraging the web.
WhyGoSolo exist because of sweat equity – mine and that of other people. If you don’t know what it’s like to work 14-16 hour days, 7 days a week for over a year and not make a penny for it – you don’t understand the meaning of sweat equity.

4. Is there room in the social networking space for more competitors? Have you seen any recently that seem interesting?

To be honest I haven’t been as diligent lately keeping an eye out. I see a lot of mobile, location based services coming out and I obviously think those are great concepts…anything that makes bringing people together easier and simpler. (We’ll be going mobile as well)

5. What approach to marketing plays a significant role in promoting and attracting customers to WhyGoSolo?

Like I mentioned, we’ve created a concept that provides a service and is saleable. Our sales pitch is probably best compared to what PR firms go out and do when they pitch a social media campaign. We pitch ours to event promoters and brick and mortar venues in the entertainment industry. Part of the pitch is a win-win-win partnership between them, WhyGoSolo and our members. We’ll all grow together and cross promote each other.
The more venues that build communities on WhyGoSolo and offer members discounts and value the more members we’ll get on WhyGoSolo.

6. If you want people to remember one thing when they think about WhyGoSolo, what is it?

Value added. This is the core of all successful businesses – we’re determined to add value to everyone we service on WhyGoSolo.

I wanted to take the time to thank Ann for doing this interview and everyone should make a visit to WhyGoSolo.com and sign up to see what a great site this is.

Technorati Tags: Entrepreneurship, social networks, Entrepreneur+Interview

The interview is in two parts and for Part 1 we discuss her background, what is WhyGoSolo and its business model and how this in this “everything for free” era WhyGoSolo will make tons of money.

So let’s get started….

1. Please provide us with a bit of your personal background in business and entrepreneurship. I was born into an entrepreneurial family – I was working in restaurants, arcades and on construction sites at a very young (and illegal) age and loved every second of it. Although I joined the Marine Corps, I always knew I would build my own empire someday. When I got out of the Marine Corps, I became a life and business coach and that gave me the opportunity to work with a lot of small business owners. I feel blessed because I was born business savvy – my clients always wanted to know how I knew what I knew and all I could say was “It just makes sense to me.”

2. Your current venture is WhyGoSolo - what’s your elevator pitch for it?

WhyGoSolo is the ideal online solution to quickly create one-on-one or small group connections for active participation in offline activities. The Social Media Platform For the Entertainment Industry: WhyGoSolo aims to serve as an all-in-one social media platform for event promoters and entertainment venues by providing the technology and the tools needed for online targeted promotion and community building.

3. There’s a ton of competition in the social networking space. What makes WhyGoSolo unique?

A few things:
First – WhyGoSolo is focused on making offline interaction take place. You don’t come to WhyGoSolo to hang out online – you come to WhyGoSolo to find what you’re looking for and than go out (offline) and be active. We bridge people’s online worlds to their offline worlds.
Second – We are building WhyGoSolo has a social platform that will act as a hub not as an end point. We’ll deliver the information our members want – where they want to receive it. We fill the gaps that exist on the bigger social networks.
Third – We are the New Media platform for the brick and mortar establishments and groups looking to create and take part in social media and building communities.

4. Since your business model seems really aligned with pushing the boundaries using Web 2.0 technologies. What is the general roadmap of your platform so readers get a sense of your vision.

Hmmm…not too sure how much I want to talk about this one I don’t want to jinx myself. What I can say is that at the end of the day it’s old business logic – provide a service that provides much added value and people, organizations and companies will pay for that service.
Everyone talks about free being the way of the web, but I don’t completely agree with that. I also don’t agree that you should build a product online and worry about the business model down the road.
So the actual answer to the question is that our general roadmap is to offer our members the most value possible and become a service they need and love. Be a service they turn to as part of a solution to either their problems or to enhance their lives.

5. Could you elaborate a little more on your approach to revenue creation?

We have three distinct revenue streams. We’re not sure as of yet which one will lead the way or how well once one is selected; we’ll be able to implement the other two. We’re raising money to finish development and hire a sales team. WhyGoSolo is a SALEABLE product and service and that will create revenue!!

That was a great Part 1 and in Part 2 we will continue our discussion of people, funding competition and what makes a startup company successful. See you next time.