Tag Archives: Business Plan

Watch Out For Snake Oil! How to Hire the Right Business Plan Writer

Watch Out for Snake Oil from The Startup Garage

Watch Out For Snake Oil! How to Hire the Right Business Plan Writer

Snake oil refers to any product with questionable or unverifiable quality or benefit. By extension, a snake oil salesman is someone who knowingly sells fraudulent goods or who is himself or herself a fraud, quack, charlatan, and the like [via Wikipedia]

Indulge me. Query “Hire a Business Plan Writer” into your favorite search engine. As a first-time entrepreneur, do the ads for most business plan services sound like this:

Business Plan Snake Oil Ad 1





As a seasoned entrepreneur, inundated with service provider and consultant guarantees of success, perhaps these ads sound more like this:

Business Plan Snake Oil Ad 2


Ok, alright…So, I took some liberties with those examples (and the character limits for an AdWords ad).

Whether you are about to begin your first business or starting another, understand the purpose of a business plan and establish criteria to hire a business plan writer.

The Purpose of the Business Plan

The first thing to know about hiring the right business plan writer and consultant is to understand the purpose of the business plan itself.  The business plan is not a single-use document or a hurdle that you overcome and never look back.  The business plan is not a glossy, collated presentation solely designed to attract investment.  The business plan is a tool that helps you through the business planning process.  It is a living document that needs to be updated regularly for as long as you are still in business.  The business plan will help reveal the major milestones that you need to accomplish.  It will provide your strategy for achieving these milestones and will act like a roadmap.  It will also include the key outcomes when these milestones are achieved including sales projections, expenses and cash flow.

Criteria to Hire a Business Plan Writer

Now that we understand the purpose of the business plan, we can begin discussing how to hire the right business plan writer and consultant.

  1. It is important that your business plan writer understands your goals and the resources that you have available to you.  If the professional does not attempt to take a holistic approach by enrolling in the professional and personal side of the equation then he/she is likely not the right individual.
  2. It is important that your business plan writer has the experience and expertise to take you through the business planning process.  Hiring someone, or a machine, to simply write a document for you will not end in a good result.  Hiring someone that has been through the startup process, that understands what works and what doesn’t, and has raised capital in the past will be vital to the success of your business and business plan.
  3. Be wary of consultants that claim to bring on investors.  While the business plan is an important tool in the capital raising process, investors are ultimately making their investment decision based on the team, the product, the market opportunity, the competition, etc. thereby making it difficult for any third-party to make such a claim.
  4. Do your due diligence to steer clear from the quacks, frauds, and charlatans. Ask to see sample work and testimonials.  Ask the consultant how many companies they have worked with and how much capital they have helped raise.  If you still are not fully convinced, ask to speak with past clients.

How The Startup Garage Can Help

Whether you have a question about writing a business plan or you would like to discuss our business plan writing services and previous client work, do not hesitate to contact us for a free consultation.

Wait…I lied!

The only snake oil I recommend is sold by Steve Earle and can be purchased on iTunes



Ten Deadly Sins of Writing a Business Plan to Raise Capital

Deadly Sins of Business Plan Writing from The Startup Garage

Ten Deadly Sins of Writing a Business Plan to Raise Capital

In order to launch a successful business and raise the capital needed to do so, a startup needs to consider several aspects of the business including the management team, the size of the opportunity, the product/service/technology, the market/sales/distribution channels, the competitive environment and several other factors.  Another key factor is how these business concepts are portrayed in the startup’s business plan.  Below is a list of the 10 most common mistakes, or sins, that we have encountered with entrepreneurs and past clients when trying to raise capital.

1. Focusing on Technology

The technology behind your startup’s product and service (especially for tech-based startups) is certainly important to investors.  They need to understand the technology and why/how it is better than that of your competitors.  Speaking towards your competitive advantages, it will take more than a patent to attract seasoned investors.  They want to see competitive sustainable advantages — aspects about the company that are not easily copied/implemented by your competition.  Once you have succinctly presented the technology and convincingly demonstrated your sustainable competitive advantages, move on to other sections of the business plan.  Many first-time entrepreneurs or entrepreneurs with strong tech backgrounds waste too much business plan real estate on the technology section and only manage confusing the reader as a result.

2. Missing the Mark on Assessing the Opportunity

If your target market is so broad that a 1% adoption rate will make for a successful business, then your target market definition is likely way too broad.  Investors want to see that you have a narrowly defined market with sales and market strategies tailored to target this specific market.  You can have a large addressable market that you hope buys your product, but it is important to demonstrate that you understand the importance of launching a business with clear and actionable target market.

3. Ignoring the Competition

All good business plans put considerable attention on the competition for several reasons.  1) Understanding the competition can help you understand your position/niche in the market and how to tailor your product, target market, pricing, marketing, etc.  2) Demonstrating the strengths and weaknesses of your competition allows you to contextualize your positioning in the market while demonstrating your competitive advantages.  3) A detailed competitive analysis shows investors that you are a thorough entrepreneur when it comes to business planning and that you are confident enough in your product that you aren’t afraid to discuss your competition.

4. Ignoring Market Need/Traction

Demonstrating market need and/or market traction will vary depending on the stage of your startup.  If you are pre-revenue then it will be difficult to portray market traction unless you have the budget to conduct customer surveys.  However, you can still demonstrate market need by highlighting comparable products or services.  You should also demonstrate the problem in the market that your product solves.  For startups with past sales it is important to demonstrate current sales and sales growth since launching.

5. Practicing Top-Down Sales Forecasting

Top-down sales looks at the overall market and uses this information to identify your company’s  projected sales, typically as a percentage of the market.  It is important to know the market size and the percentage of the market that you are projecting to capture in order to validate your model.  However, your model should not be based on a percentage of the market and will raise red flags for sophisticated investors.  Investors want to see a growth/revenue model that uses sales data and assumptions that predict sales by product and region.  They also want to see a ‘growth driver’ upon which your sales are generated.  This may be the number of sales representatives, website traffic and conversion rates, size of email lists, number of licensees, etc.

6. Unrealistic Exit Strategy and Multiple

“We expect to be acquired by Microsoft for a 50X EBITDA multiple” is not a good exit strategy.  Rather, provide some statistics of recent exits from comparable firms and provide data such as sale price, revenue at time of sale, revenue/EBITDA multiple.  Provide a range in the multiple size that you anticipate being able to attract based on these statistics and provide a description of key milestones that will demonstrate when you think the startup is likely to be acquired.

7. Unrealistic Valuation

First and foremost, investors may lose interest if your startup is offered at an unreasonable price as this poses an obstacle for negotiations before they even begin.  Additionally, if/when you need to raise the next round of capital, you dont want to risk taking in money in a down round because you overvalued the company early on.

8. Ignoring Milestones

Milestones are discussed in other sections of this blog but it is important to highlight them on their own as well.  Milestones, both past and projected, help to build value, establish credibility and project goals.  They show investors what you have accomplished to date (this also gives you legs to stand on when defending your valuation).  They show investors how you will spend their money.  They show investors that you are a sophisticated entrepreneur and that you understand what it is going to take to build a successful business.

9. Junk and Fluff

If the sentence, picture or graph does not, in some way or another, tell investors why they should invest in your business then leave it out.  Investors are busy and you’ll be lucky if you can get them to read half of your business plan in their first read through.  Don’t ruin your chances by including unnecessary junk or fluff as chances are these will be the choice lines that the investor decides to read.

10. NDA Insistence

In short, investors don’t sign NDAs.  Asking them to do so will make you look like you don’t know what you’re doing.  Investors are more interested in finding good entrepreneurs, not good ideas.  Investors know that anyone can come up with a good idea but that very few have the ability to actually pull them off.  Good ideas come down their pipeline all the time and they will not be afraid to overlook yours because of an NDA.

Investors look at hundreds of deals a month.  You are competing for their time.  Don’t waste precious minutes of their attention or risk not getting their attention because of an NDA that provides little to no benefit.  That’s right, an NDA provides little to no benefit.  If your idea is so easily stolen that justh earing the concept is enough to allow anyone to replicate it, then the investor likely wont be interested in the first place.  In any case, your business plan does not need to include the secret sauce and you should be able to openly share the concept of the idea of anyone.  Lastly, the power of any legal agreement is tied to your ability to enforce it.  Unless you are prepared to sue investors if you feel they stole your idea, why waste having them sign an NDA?


Whether you have a question about your business plan or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

7 Critical Steps for Attracting Venture Funding

7 Steps to Attracting Venture Capital from The Startup Garage

7 Critical Steps for Attracting Venture Funding

First and foremost, venture capital firms want to see an entrepreneur with passion and vision.  Unfortunately, this usually isn’t enough to get them opening their pocket books.  Some venture capital firms will have narrow criteria for the types of companies that they invest in while other will adopt a more broad portfolio and invest across many sectors.

In any case, nearly every venture capital firm is looking to see if you’ve made signification traction for each of the following critical steps.


1. Team

Investors may think that you have a great idea and that the market poses a significant opportunity, but if they have confidence in your team’s ability to seize the opportunity you will be dead in your tracks.  Your team is perhaps the single biggest factor that investors consider when they are evaluating the attractiveness of the investment.   Your management team does not have to be fully built out, but the founders must possess the credibility to launch the company and built a world-class team.

2. Stellar Idea

Every entrepreneur gets attached to their idea.  However, the reality is that very few start-ups present an idea that is actually unique.  What makes an idea compelling to an investor is 2 fold: 1) does the idea offer a solution to a big problem or opportunity, and 2) is the idea protected via intellectual property or some other barrier to entry.

3. Technology

Technology is similar to the stellar idea.  Your technology needs to be broad enough to to solve a problem for a large group of people but focused enough to solve a problem that is not currently being solved.  Similarly, good technology needs to be protected.  Patents alone are not enough; you need talent to assure investors that you will stay ahead of the game.

4. Market Opportunity

A good market opportunity is more than just a large market size.  It is a market that is not over crowded with competition.  It is a market with an opportunity that has yet to be exploited.  It’s a market that has a lot of potential for you to continually create value down the road.  Truly innovative companies discover ways to create big markets.

5. (Sustainable) Competitive Advantage

Most entrepreneurs understand the need to have strategic advantages (both product/service advantages as well as business strategy advantages), but what many fail to understand is that venture capitalists want to know just how sustainable that advantage is.  If your competitor can reverse engineer your idea, hire new personnel, implement a new sales/marketing strategy or lower their costs to match your price point then your competitive advantage is not very sustainable.  Sustainable competitive advantages are not easily copied and generally stem from one or more of the following: vendor relations, product sourcing advantages, prime location, unique products / services, customer loyalty, customer service reputation, or distribution channel advantages.

6. Credible Financial Projections

Every investor knows that your financial projections are dependent on assumptions and that those assumptions will undoubtedly change.  But, financial projections are extremely valuable in explaining the business to the investor – they show what drives your growth, how profitable you can be, and where the company can go over the next 3 to 5 years.  They also show your ability to turn a business concept into a realistic, attractive business model.


7. Proof of Concept

Lastly, we have proof of concept, or market validation.  Behind the management team, this is one of the other more influencing factors.  Venture capitalists want to know, are people buying this?  Have businesses signed letters of intent?  Is there evidence that your solution will be adopted by the masses?  The more credibility and market traction that you have, the more attractive your startup will be to venture capitalists.


Whether you have a question about raising capital or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

A Tech Company without a CTO is like a Bakery without a Chef

Chief Technology Officer from The Startup Garage

A Tech Company without a CTO is like a Bakery without a Chef

Every Tech Startup Needs a Chief Technical Officer

Many entrepreneurs of successful tech-based companies do not come from tech backgrounds.  However, the biggest mistake that a non-tech entrepreneur launching a tech business is to neglect bringing on a tech savvy co-founder on the management team.  This is like a bakery or restaurant launching without a chef.


In order to be a successful tech startup, the team must consist of a Chief Technical Officer (CTO) level member to help with the technology plan.  This is generally achieved in one of the following ways:

  • CTO Level Co-Founder (Equity)
  • CTO Level Board Member or dedicated Adviser (Free or Equity)
  • CTO Employee (Salary)
  • CTO Part Time Consultant (Paid hourly or by project)
  • Web Development Firm hired to do “Conceptualization Phase” – This usually includes thorough wire-framing (Paid per project)

Why is a CTO so Important?

Many entrepreneurs think they can bypass this team member by simply going to a web development firm and asking for a free proposal.  For simple projects lead by people comfortable with web and mobile tech this may work.  Generally, this strategy falls short.  Especially when the entrepreneur begins to seek capital from sophisticated investors.

Your web/mobile idea needs to be transformed into a working product/service.  A CTO is needed to develop a technology plan to make this happen.  Furthermore, your CTO will be able to hire a development team that can build out your idea in appropriate phases.  This team can be in-house, outsourced within the U.S. or outsourced internationally.  This is one of the decisions that you and your CTO will need to make up front in order to put your technology plan together.  This will allow you to estimate costs and timeline.

If you decide to outsource your development you will want to put together a good RFP with your CTO before approaching potential web development vendors. See the RFP Workbook below. If you plan on hiring a web firm you will just need to interview and get quotes from them for the conceptualization phase. If you plan on doing it inhouse your CTO and the founders should be able to put together system requirements, technical specs and system architecture for you and then build wireframes and MVP if applicable.

What’s in a Technology Plan Anyway?

A technology plan can consist of:

  • Technical Specs/High Level System Architecture (Web/Mobile, etc)
  • Development Plan (Timelines/Costs/Budgets)
  • Product Development Team
  • Wireframes


Whether you have a question about your technology plan or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Seed VC Funding in Silicon Valley On The Rise

Venture Capital Investment Trends from The Startup Garage

Seed VC Funding in Silicon Valley On The Rise

Seed VC Funding in Bay Area on Pace for Record Year

Seed funding in the San Francisco area appears to be on pace for another record year.  Seed deals in 2013 have seen a massive push towards the mobile sector with a contraction to the online sector.  Seed funding to both San Francisco and Silicon Valley reached over $192M across 242 deals in the first half of 2013 alone.  To put this in perspective, this is more than all of 2010 and nearly comparable to 2011 investment funding and deal levels.

Seed funding in the San Francisco area appears to be on pace for another record year. The Startup Garage


Funding By Sector

The Bay Area seed investment portfolio has seen a steady increase in internet seed deals since 2010.  Though, unless there is a large push in the back half of 2013, it looks like internet see deals will be less than 2012.

Seed funding in the San Francisco area appears to be on pace for another record year. The Startup Garage

On the other hand, mobile deals are already at 75% of the funding levels seen in all of 2012 and is poised for a steady growth trend.


Most Active Seed Investors in the Bay Area

The following chart depicts the largest investor groups in the Bay Area.

All data and graphs provided by CB Insights.

Whether you have a question about Angel Investment or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Questions You Can Expect From Investors

Questions to Expect from Investors from The Startup Garage

Questions You Can Expect From Investors

The Most Common Questions Asked by Investors

Statics show that investor receive thousands of plans a year and will only proceed to the next round with 10% of those at best.  Regardless of the type of investor you are targeting (sophisticated individuals, angel groups or VC firms), it is important to be fully prepared to answer every question that they may come up with.  Some of the most common questions that you can expect to hear are the following:

  • Why should I/we invest in you?
  • What are your competitive advantages?
  • What is your current market traction?
  • Is this business scalable?
  • At what point do you break-even?
  • What is your exit strategy?
  • What are some comparable exits of other companies in your industry?
  • Do you have intellectual property such as a patent?
  • What is your valuation and how did you derive it?

Time and time again unseasoned entrepreneurs’ presentations fall flat when they are not prepared to answer these types of questions.  Take the time to make sure that your business planning is complete, that your business plan is dialed in and that you are prepared to answer these and related questions.

Whether you have a question about Investor Presentations or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Top Cities for Venture Capital Activity

Top Cities for Venture Capital Activity

Entrepreneurial Density and Venture Capital

The chart below looks at the total amount of dollars spent by venture capital firms as well as the total number of deals on a per-capita basis.  As we can see, Boulder came in third behind San Jose-Sunnyvale-Santa Clara (AKA Silicon Valley) and San Francisco-Oakland-Fremont.

Cities for Venture Capital from The Startup Garage

The map below provides a visual depiction of the chart above:

Map of VC Deals from The Start Up Garage

Maps and statistics provided by TheAtlanticCities.


Only the Partial Story

While San Francisco appears to be beaten out by Silicon Valley in terms of venture capital activity, we have to keep in mind how population is affecting this number.  In terms of total dollars invested, San Francisco attracted some $7B in VC funding, compared to the $4B in Silicon Valley.


Whether you have a question about Venture Capital or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

The Importance of Differentiation

Standout Competitive Advantage from The Startup Garage

The Importance of Differentiation

When asked about their product or service, most entrepreneurs could go on and on with the various features and advantages.  However, once you ask them, “what makes your product or service desirably different?” their pitch begins to flounder.  They begin to fall back on their key features or advantages over their competition.  But, the question remains, while your product may have an advantage over the competition, is that enough to make it desirably differentiated?  When determining how you can differentiate your product or service, consider the following:

Core Competencies

Too many entrepreneurs and startups get caught trying to be everything to everyone.  Identify a problem that is not be solved and determine how you can best apply your core competencies to solve that problem.  It doesn’t take endless features and nuances to solve a problem well.

Know Your Customer

Know the fears of your customer.  Determine the reasons that they either avoid a purchase or run towards it.  Continue to narrow your target market until you can identify the crux of the problem for a segment of the population.  The better you know this segments pain points, the better able you will be to create a product that solves a unique problem in the market.

Write a Positioning Statement

A positioning statement is a one or two sentence statement that articulates your product or service’s unique value to your customers in relation to your direct competition.  It explains why your customers should purchase your product or service over that of your competitors.


A Note On Intellectual Property

If your product or service truly is well-differentiated and one-of-a-kind you may be able to acquire some intellectual property to help secure your idea from competitor theft.  Discuss your product, service, processes, etc with a startup lawyer to determine if you can obtain any trademarks, patents or copyrights. 


Whether you have a question about Differentiation, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!


Narrowing Your Addressable Market Down To Your Target Market

Narrow Target Market with The Startup Garage

Narrowing Your Addressable Market Down To Your Target Market

Before we go over some tips for narrowing your addressable market into a concise target market, lets first define these terms.

Addressable Market

The addressable market is the group of people (or businesses) whom might be interested in what you are selling.  It is the broadest umbrella of potential customers that your target or service may be suited for.

Target Market

The target market are those people (or businesses) within your addressable market whom are most likely to buy from you.  Typically, they are the lowest hanging fruits and therefore the cheapest to acquire.

Narrowing Your Addressable Market Down to Your Target Market(s)

It is important to have both an addressable market and a target market when writing a business plan.  Your addressable market will give the reader (potentially investors) a good understanding of the potential market opportunity should this business take off.  However, do not stop here.  Many entrepreneurs make the mistake of only looking at the big picture when defining their market.  Investors know – and so should you – that a start-up cannot be everything to everyone.  Startsups have a lot going up against them: no market awareness, tight sales and marketing budgets, steep competition, etc.

As a result, you will want to target a strategic set of market segments within your addressable market.  The low hanging fruits – those most likely and able to buy – will probably want to be your initial focus as these will cost the least amount of money to acquire, thereby leaving sales and marketing dollars for other segments.

A Note on Core Competencies

When determining both your addressable and target markets, keep your core competencies in mind.  You may be able to make moderate tweaks to your product or service to make yourself attractive to a new segment.  This may or may not be in your best interest.  Just be sure to stay focused on what it is you do best and determine the audience that most needs your solution to their problem.

Whether you have a question about your Addressable vs Target Market, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

America’s Health Craze Leads to Healthy Margins

Healthy Lifestyle Entrepreneur News from The Startup Garage

America’s Health Craze Leads to Healthy Margins

Though America still tops the charts in diabetes, the country is increasingly becoming concerned with the negative health effects of certain foods.  As a result, the food industry has seen an influx in healthier food options, both from new companies as well as large manufacturers.

Higher Margins

Given that health-conscious consumers are generally willing to pay more for healthier food, this segment of the industry typically experiences higher margins.  The growth in health-conscious shopping as well as the higher margins associated with these products has fueled a surge in the industry over the past few years.  The graph below, provided by IbisWorld  depicts  the profitability of various food groups:

Healthier foods tend to be sold at higher margins. The Startup Garage. TSG Enterprise

Growing Expectations

As the media continues to highlight the benefits of eating healthy and as more and more American adopt this new lifestyle, manufacturers will continue to product healthier foods.  Furthermore, with food commodity prices projected to be less volatile, the industry is projected to experience even higher margins.  Most notable is the price of corn, which is an input in all 10 of the most profitable food industries.  During the five years to 2018, the price of corn is anticipated to decline at an annualized rate of 2.6%.

Moderate Risk

Despite such high margins and growth projections, the industry experiences some risk.  The primary drivers of risk include demand from retailers and the price of commodities.


Whether you have a question about America’s Health Margins, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!