Sequoia Capital’s 2nd Gospel: Good business plans

Question of the Day: Can your business mission be summarized on the back of a business card?

If not, then I want to make sure you all see this: Sequoia’s Gospel of Startups More True Than Ever. In it, Mike has republished Sequoia Capital’s 1st Gospel for building successful startups called Elements of Sustainable Companies. it includes things like: * Clarity of Purpose: Summarize the company’s business on [a] business card. * Large Markets: Address existing markets poised for rapid growth or change. A market on the path to a $1B potential allows for error and time for real margins to develop. * Rich customers: Target customers who will move fast and pay a premium for a unique offering…. etc.

Mike is right that these principles are even more important in the current market (and we’re glad others are fans of Teddy Roosevelt!)

But also I want to draw your attention to Sequoia’s 2nd Gospel, a list of tips for how to write winning business plans. In Writing A Business Plan, the firm says: We like business plans that present a lot of information in as few words as possible. The following format, within 15-20 slides, is all that’s needed.”. So here’s the list…

Company Purpose: * Define the company/business in a single declarative sentence.

Problem: * Describe the pain of the customer (or the customer’s customer). * Outline how the customer addresses the issue today.

Solution * Demonstrate your company’s value proposition to make the customer’s life better. * Show where your product physically sits. * Provide use cases.

Why Now * Set-up the historical evolution of your category. * Define recent trends that make your solution possible.

Market Size * Identify/profile the customer you cater to. * Calculate the TAM (top down), SAM (bottoms up) and SOM.

Competition * List competitors * List competitive advantages

Product * Product line-up (form factor, functionality, features, architecture, intellectual property). * Development roadmap.

Business Model * Revenue model * Pricing * Average account size and/or lifetime value * Sales & distribution model * Customer/pipeline list

Team * Founders & Management * Board of Directors/Board of Advisors

Financials * P&L * Balance sheet * Cash flow * Cap table * The deal

That’s it! Straight form the burning bush otherwise known as Sequoia Capital! Good luck.