This week, I'm working with a business valued at $100m – Here's my suggested business plan table of contents.
Sometimes the perfect content is nothing at all.
The $100 Million Myth: Fundraising vs. Valuation
So yes, I'm working this week with a startup that has a valuation or that raised money to have a valuation of over $100 million. There are a few things you need to know about fundraising and valuation and the myths involved in this whole process. Having a high valuation does not necessarily mean anything at any stage whatsoever. So when you look at a startup and see that they raised $1 billion, that doesn't mean that this startup is successful by any means whatsoever.
What you need to look at is the traction they're doing. Are they getting users? Are they growing? Are they growing in a good way? Do they have an impact on the world? Are they working in a good market that is growing as well? These questions are much more important than just how much money did they fundraise.
Great examples like Theranos and FTX have raised, I know that FTX has raised over a billion dollars and eventually they were just scamming investors out of it and they didn't actually, they affected the like FTX affected the crypto world in a very negative way. Theranos, the startup world and the healthcare industry in a bad way as well for years to come for other entrepreneurs. So when it comes to the myth, it doesn't matter what your valuation is. It shows that you have something going on. That's the reality of it.
So if people invested a hundred million dollars or with a valuation of a hundred million dollars in your startup, that means they all saw something that could be new as a person, as an entrepreneur, a team member, like how Adam Newman's latest startup is already a unicorn without even having anything to show because they believe in the entrepreneur involved. So this is a possibility and there is the other possibility that you are doing something right and you're growing on a steady manner, which is luring more investors into investing in your startup. Hence the valuation.
You really need to value fundraising as a peripheral item. Fundraising is and always will be only the reason to accelerate the growth of a startup, not more, not less. It's just that and it always will be just that.
When I start speaking to clients who have high valuations or who had successful fundraising rounds, I notice that there is something special about them. FTX, Theranos, and all these companies that didn't really work out well are anomalies, believe it or not. The majority of companies that raise a lot of money have something in their operational skills. They have a team that is qualified enough to keep growing and they have a team that has persistence in their genes, in their blood, in the way they talk, in the way they work. It's extremely focused on just growing the company and the vision that they have.
So it is really about operations, not fundraising. And that's why in a lot of cases when entrepreneurs send over their business plans or get ready for a pitch presentation, I always take a look at their operations and find that they're doing something right. I would see that their business plan consists of a lot of plans in the future, a lot of research that is well done and mostly an operational structure that is perfect. Additionally, there is the technological stack and everything that shows how the product is really good. It just needs the proper execution for it in order to actually get it done.
Starting Up: Business Plans vs. Fundraising
A business plan is helpful in this particular gray zone. When you're starting a business and when you are getting ready to launch, it's very good to put all your ideas into a business plan. Now when I say that, a business plan could be a sheet of paper, an Excel sheet of paper with some financials. It could be a piece of paper with just some writing with a pencil on it showing what you want to do and how you want to do it. This is the definition of a business plan.
The internet and the investment worlds tend to complicate this, especially banking and loans. They tend to complicate their requirements, which is normal because they just want to get more information about the business from you. But the truth is, a business plan is what works for you to achieve operations in a way that would make your company grow.
One Size Doesn't Fit All: Your Table of Contents Should Be Unique
If you're looking for a specific table of contents for a business plan, then you are not going to find the internet world helpful whatsoever. The consulting world as well won't be helpful. Anyone really wouldn't be helpful in this matter because every single person has an idea of a business that is different than yours and they have a plan of operating that is so much different than yours and they want to say the story in a different way than yours.
When I work with a startup on creating a pitch or creating a business plan, I always go with the first question and the most essential question: What's your story? What are you trying to say here? What are you trying to achieve? What do you want to plan? What do you want to happen in 10 years, in 5 years? How do you want it to happen? Is it something that's going to change the world? Is it something that is going to focus on a specific market? What is it exactly?
There is no one size that fits it all. When you start researching structures, I will recommend a structure myself, but that doesn't mean that you have to use it. You could read it and then decide by yourself whether you think, "Oh, I could use this section." Or, "No, I won't use this section. This is not a perfect section." And so on until you decide which structure fits you the most. Of course, it depends on who you're sending this business plan to, what are you using it for, and how are you going to update it.
For instance, if you're using it really for your operations, I sometimes recommend to my clients to not use something like Microsoft Word or Google Docs or a business plan in this form and add a lot of text because the truth is this isn't going to change. Operations always change. So you need to create an Excel sheet with a timeline, a financial model. This is what really you need to see. You need to put targets of sales. You need to put targets of users. These are the things that are actual strong elements when it comes to a business plan that is used for operations. But if you're asking for a loan, a business plan for a loan, that's a totally different story.
Banks, Investors, Entrepreneurs: Who Needs What?
Now let's talk about different types of business plans. When it comes to banks, business plans usually are a high requirement, especially when it comes to loans and investments for banks, but mostly loans. Whenever there are loans in question, it is a common requirement that they would ask for a business plan. Some banks provide their own structure, others just ask you for your own business plan. The reason why they're doing that is they want to read your story and assess whether the market has the opportunity to actually grow in a way that could get them the return on investment. They're just considering you numbers.
That's why they're going to focus mostly on your financial model and your market research. If you're going to work in the paper industry and you're projecting billions and billions of dollars, this might not make sense to them. If you're working on something like cryptocurrency and you're projecting billions and billions of dollars, this also might not work for them because they know that this is a highly volatile industry. But if you're starting a restaurant or you're putting evaluations and financial modeling projections that are reasonable, then this might be the perfect match.
That's for banking. Investors, on the other hand, usually require pitch decks because they don't really have a lot of time to invest a loan in you or so, and they don't have a lot of time to read through all of a big business plan. They would just ask for an investor presentation that is 10 slides or so to just showcase what your business is and your idea is and your traction. The content is very similar to a business plan, but the density of the information is a lot less because you don't really need to say that information to the investor, at least at a first stage. Later on, they could actually ask you for a full business plan or a financial model if they have the intention of investing in your startup.
Now, the final category is entrepreneurs. In my experience, entrepreneurs do not need a business plan. There is a famous book or there is a nice book called Burn the Business Plan that I liked very much. What it simply states is most really highly successful startups or entrepreneurs don't use business plans. They just go to work. That's what they do.
For that reason, they don't need a pitch deck. They don't need a business plan. They just need to go to work. When they do apply for a loan or for an investment, at that moment, they would start getting the material done. For their daily operations, they might need a sheet that shows the target just to have an organizational structure of some sort, to have everything organized in a piece of paper, but they do not need any business document to keep them from running.
I had a friend of mine who was a friend in high school and he just wrapped around one to two million dollars of sales in a print-on-demand business. The print-on-demand business is not really that huge of a market. It's just a simple product. You print on t-shirts, you print on mugs. It's not really complex. When I asked him about his business plan or his pitch deck, he said he didn't do anything. He just worked in a print shop. He printed using his hand on printers and then from there, he bought his first printer. He started to sell. There are things that are human in entrepreneurship and this is the focus of that.
The Power of Planning: Why Business Plans Matter (Even If You Don't Need One)
That being said, creating a business plan could really, really be very beneficial. Let me tell you why. In many cases, through my experience, I've seen that a lot of entrepreneurs divert, which is extremely normal, but it's good to have something that is a constant, non-changing element of your business. That's why when you look at your old business plans and you see how you pivot, this actually adds the impact of your startup in a very good way. I would advise creating a business plan, not for your bank, if you need it for the bank, sure, but not necessarily for a bank or for an investor, but for yourself to store in your psychological, deep subconscious what your business is really about, what you're really trying to achieve with this business.
When you write it, you're going to store this document. You're going to value this document. You're going to say, "This is my first business plan and this is what I want to achieve." The market research and the financial model elements, you don't have to add it to the business plan because in all honesty, these numbers change every month or every week in some cases. They're not that strong, but how are you doing what and what is your plan of the future of the upcoming five or ten years? This is the thing that you would see in Coinbase hasn't changed, in Tesla it hasn't changed. Their plan and their vision are the same, but their operations change, which is absolutely normal.
(For Paid Subscribers) My Table of Contents Templates: From Idea to Series A
Now, let's talk about my recommended table of contents for each fundraising stage. We're going to start with ideation.
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