Reid Hoffman, co-founder of LinkedIn, also an angel investor
wrote an article for TechCrunch on
how to create an effective business plan.
Hoffman asks three poignant questions of the business plan
author:
1)
How will you reach a massive audience?
2)
What is your unique value proposition?
3)
Will your business be capital efficient?
Hoffman advises that the entrepreneur have answers to “how
do we get to one million users? Then how do we get to 10 million users? Then how
will you get deep engagement from the users?”
He advises that you make your product unique enough to
separate yourself from other out there, but not so unique that the market isn’t
ready for your invention or business. He states that a product too far ahead of
its time will be a failure.
The business plan must be prepared for the initial allotment
of cash but also the stable, ongoing funding, also. The business must have
available credit and be prepared for unforeseen changes, to be able to
flourish.
"Akira Hirai is a regular guest speaker on the
topics of business planning, financial forecasting, and capital formation at
the Phoenix chapter of the Ewing Marion Kauffman Foundation's FastTrac
entrepreneur training program and at various programs affiliated with Arizona
State University (ASU). He also mentors companies preparing to present before
the Arizona Angels and the Arizona Venture Capital Conference (AVCC). Akira has
also served on the Board of Directors for ITASA (Information Technology
Association of Southern Arizona). He was named Entrepreneur of the Week in
October 2000 by vCapital.com" (Hirai, 2014).
Akira has advice on how to create an
effective business plan. Some of the things he says to do are:
1)
Avoid value inflation – leave out the
hype. Present your idea in the format of this is the problem and this is the
solution. Let the investors determine whether there is value in your ideas.
2)
Don’t try to be all things to all people –
narrow the focus and be concentrated on your idea and solution. Have a core
thread and if there are other ideas or products, let them support the main core
of your idea.
3)
Have a go-to-market strategy – without a good
sales, marketing, and distribution plan, the business plan will fail.
He has many good points; such as don’t make the plan too
long or too technical. Make sure to include risk analysis and to be organized.
He emphasizes the financial sections should be detailed and realistic. A plan
that is too unrealistic will make the plan without credibility to the
investors.
From what I’ve read, Akira knows how to put together a good business
plan. I found his advice to be straight forward and very sensible. This is
definitely something to keep in reference while planning my business plan.
