Wed Weekly Oct 21
Business Model or Business Plan?
Progress —
We’re in the midst of responding to a lot of inbound requests where we need to generate a lot of documents, proposals and hopefully soon agreements. Our focus on partnerships through the lockdowns seems to be bearing some positive fruit. All positive news.
Additionally, I’m in the process of revising our financial projections for Trust Exchange and that has forced me to do some deep thinking about our business plan and business model. Personally, I think the classic “business plan” is useless. I’ve raised over $100M and not a single investor has asked for a business plan. In my early days, I wasted untold hours writing business plans until I realized no one was reading them. While potentially useful as an internal guide, I don’t think they add value to people outside of the organization. A waste of time for startups.
If you’re starting something new, I’d suggest focusing on the “Business Model” vs. the plan. Here is my take on the differences:
Business Plan: A comprehensive plan delineating the goals, market assessment, competitive landscape and detailed financial projections. Some would view creating a business plan as the critical first step in starting a business.
Business Model: Description of how a company creates its product, delivers the product and gets compensated.
A business model is a “black box” system approach whereas a business plan is a set of words. It delineates the sets of inputs and outputs in a clear manner combined with the “magic” that makes it a better business.
I’ll go into this more deeply in the subscriber version. Speaking of that, the Raising Capital Series is about done. It’s been in flux since the process has been fairly dynamic over the past few weeks.
Please let me know if there are other topics you’d like to discuss. I’m also working on a series of financial model posts and examples…how to create a forecasted P&L, assumptions etc.
Keep in mind that you can browse the archives of these posts here: edsull.substack.com
Random —
I keep checking in here for the Q3 Data on Venture financing: https://www.cooleygo.com
Expecting it to be very instructive.
Please give me feedback on Twitter. Which section above is your favorite? What do you want more or less of? Other suggestions? Let me know! Just send a tweet to @edsull
Happy Hump Day!
Ed