Characteristics of a Good Venture Plan

1. Presents a clear explanation of why the venture concept is a significant opportunity
2. Provides a concise description of the venture's products or services
3. Provides a clear, rational explanation of why the venture idea is better than anything else already available
4. Succinctly explains customer benefits in qualitative and quantitative terms
5. Provides a clear explanation of the one or two things the company does best
6. Focuses on market-driven opportunities
7. Provides evidence of customer acceptance of the venture's products and services
8. Presents evidence of the marketability of the products and services
9. Presents a quality, sophisticated, experienced management team, advisors, and board of directors with complementary and encompassing business skills
10. Gives a clear sense of what the founders expect to accomplish in 3 to 7 years
11. Provides a rational explanation of why the investor should trust the management team to do what they say they are going to do
12. Identifies all the alternatives available to prospective customers
13. Addresses how the venture will develop and sustain a distinct competitive advantage
14. Addresses how the venture will develop and sustain a proprietary position
15. Contains reasonable financial projections with key data explained and justified
16. Shows how and when the venture will generate sustainable positive cash flow streams
17. Describes the manufacturing and/or service delivery processes and associated costs in appropriate detail
18. Explains and justifies the level of product development required
19. Justifies financially the means chosen to sell the products and services
20. Supports credible growth projections
21. Provides a clear explanation of how the money invested in the venture will be used
22. Shows how and when the venture will generate sustainable profit
23. Shows an appreciation of investor needs
24. Shows how investors can cash out in three to seven years, with an appropriate return on their investment
25. Provides a clear explanation of what the investor will get for their investment
26. Identifies significant risks and proposes rational contingencies
27. Has the right appearance...not too fancy, not too plain
28. Is arranged properly with the executive summary, table of contents, and chapters in right order
29. Is the "right length"...not too long, not too short...to convey all the pertinent information
30. Is plausible throughout
31. Has facts rather than opinions
32. Is quantitative rather than qualitative
33. Stresses specifics rather than generalities
34. Reads like a combination of the Wall Street Journal, a model of good business writing, and USA Today, a model of good story-telling

Critical Path in a Venture

 Ultimately, the function of a business venture is to satisify customer needs, wants, and desires by transforming their problems into solutions (and capturing a bit of profit reward along the way).

Waterfall Venture Planning

1. Vision ... "We will change the way someone does something!" [Be specific, 100 words or less: Who is someone? What is the something? Why are you going to change the way it is being done now? How?]
2. Mission ... "We will earn a profit solving customer problems better than the competition!" [Be specific, 100 words or less: Who are the target customers? What are their problems? How will you solve them? What is the competition? How are you better? What will you do to earn the business? How will you make a profit? How much?]
3. Goals ... "In five years, we will ..." [What are your three most important goals?]
4. Objectives ... "To reach our goals, we must accomplish these objectives ..." [What are the three most important objectives for each goal that must be accomplished in the next six months?]
5. Strategies ... "To accomplish our objectives, we will do this better than our competition ..." [What methods will you use to reach your objectives?]
6. Tactics ... "To implement our strategies, we will do these things ..." [What three procedures will you use to carry out your strategies?]
7. Tasks ... "To execute our tactics, we will ... " [What three things must be done to realize your tactics?]
8. Assignments ... "Here's who is going to do what and when ... " [Who are the best people for each task?]

How to Create a Venture Plan

1. Start with a clear, concise executive summary of your venture. Think of it like an elevator pitch. In no more than two pages, billboard all the important stuff. At the top, communicate your value proposition: what your venture does, how it will make money, and why customers will want to pay for your product or service. If you are sending your plan to investors, include the amount of money you need and how you plan to use it. You have to know the whole picture before you can boil things down, so tackle the summary after finishing the rest of your plan.
2. Next, establish the market opportunity. Answer questions like: How large is your target market? How fast is it growing? Where are the opportunities and threats, and how will you deal with them? Again, highlight your value proposition. Most of this market information can be found through industry associations, chambers of commerce, census data or even from other business owners. (Be sure to source all of your information in case you are asked to back up your claims or need to update your business plan.)
3. While you may have convinced yourself that your product or service is unique, don't fall into that trap. Instead, get real and size up the competition: Who are they? What do they sell? How much market share do they have? Why will customers choose your product or service instead of theirs? What are the barriers to entry? Remember to include indirect competitors--those with similar capabilities that currently cater to a different market but could choose to challenge you down the road.
4. Now that you've established your idea, start addressing the execution ... specifically, your team. Include profiles of each of your business's founders, partners or officers and what kinds of skills, qualifications and accomplishments they bring to the table. (Include resumes in an appendix.)
5. If potential investors have read this far, it's time to give them the nuts and bolts of your business model. This includes a detailed description of all revenue streams (product sales, advertising, services, licensing) and the company's cost structure (salaries, rent, inventory, maintenance). Be sure to list all assumptions and provide a justification for them. Also, include names of key suppliers or distribution partners.
6. After all of that, one big question still remains: Exactly how much money will your venture earn? More important, when will the cash come in the door? That's why you need a section containing past financial performance (if your company is a going concern) and financial projections.
7. Three-year forward-looking profit-and-loss, balance sheet and cash-flow statements are a must ... as is a break-even analysis that shows how much revenue you need to cover your initial investment.
8. For early stage companies with only so much in the bank, the cash-flow statement comparing quarterly receivables to payables is most critical. "Everyone misunderstands cash flow," says Tim Berry, president of business-plan software company Palo Alto Software. "People think that if they plan for [accounting] profits, they'll have cash flow. But many companies that go under are profitable when they die, because profits aren't cash."
9. After you've buffed your plan to a shine, don't file it away to gather dust. "A business plan is the beginning of a process," says Berry. "Planning is like steering, and steering means constantly correcting errors. The plan itself holds just a piece of the value; it's the going back and seeing where you were wrong and why that matters."

[Thank you, Mary Crane]

Phases in Creating a New Venture

The Desire Phase ...
Determine why you (and your teammates) want to start a new venture

The Discover Phase ...
Form initial core entrepreneurial team
Identify problems or opportunities

The Define Phase ...
Screen problems or opportunities
Define the value proposition

The Design Phase ...
Generate potential solutions
Create a business venture hypothesis
Design a business venture plan

The Deploy Phase ...
Acquire needed resources
Launch the venture

The Develop Phase ...
Test, validate, and refine the venture hypothesis
Develop and iterate the venture based on real customer experiences

Writing an Effective Venture Plan

1. Tell your story, tell it quickly, and tell the truth.
2. Make sure that on every page the reader gets the information you want them to get.
3. Creativity helps, but scale it back and be traditional with your headings and your formatting.
4. Use talking headings to send the reader in the desired direction.
5. Brand your pages; use appropriate colors; use images and charts and graphs to help reader understand key points; write short paragraphs; use headings that help the reader follow the story you are telling; caption your charts/graphs; use graphics to highlight your sentences and use sentences to explain the graphics. 
6. Avoid fluff.
7. Cite your sources. 
8. Every paragraph should represent a discrete chunk of information. Every paragraph needs a thesis sentence. This is normally the first sentence. The middle of the paragraph should add important information to elaborate on the main point. The last sentence of each paragraph should tie up the specific chunk of information and direct the reader to the next chunk of information in the next paragraph. The reader should know all of your main points by 'reading the first and last sentence of every paragraph.
9. When using bullets or other formatting maneuvers, decide what you want to emphasize, then use the appropriate marking words or graphics. To emphasize importance, for example, use words or phrases that indicate value; if you emphasize time, then use words that indicate chronology. Make sure that the mixture of bullets and numbers you choose conveys the right tone.
10. To proofread, print a copy and go through it out loud. Look for any place the reader stumbles out loud. Read it backwards if necessary. Have a friend outside of your team read it out loud and see where they get confused. Read slowly to catch basic errors. Allow adequate time to do all this ... it is time-consuming, so give yourself the time to become perfect.
11. When in doubt, check for rules of grammar and usage with a handbook. 

[Thank you, Dr Randolf Accetta]