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The question below was originally posted to the sage-members mailing list; I'll repost my response here as an example of the kind of ranting I so dearly adore.
I am with a startup internet company, and we're attempting to build a business plan that is essentially centered around subscription-billing our clients n% above our projected bandwidth, real estate, support and resource (hw/sw) costs. Specifically -- I'm looking for examples of how people have done this before, and how successful their projections were, and the science and formulas behind the plans. I'd like to know the best approach to this problem.
I'll respond to your question with a brief essay that not only fails to answer the question, but implies that the question itself should be unasked, in the same way that the proper answer to the Zen koan "What is the sound of one hand clapping?" is "Golly, those seven-layer burritos really stay with ya, eh?"
Let's go to the play-by-play.
I am with a startup internet company
Hi! Fun, isn't it?
and we're attempting to build a business plan that is essentially centered around subscription-billing our clients n% above our projected bandwidth, real estate, support and resource (hw/sw) costs.
Okay, hold up.
A startup's business plan should clearly explain what unique or under-serviced market the company's going to provide value to, how they're going to provide it, why that's a good idea, and why your company has an unfair advantage over its competitors, both now and in the future. What you describe above is a necessary condition of your survival, not a plan. A plan would be more like:
Monkeybagel Netcafes Business Plan
There's a strong demand for access to the Internet in Eastern Europe, but relatively few people can justify the cost of owning a computer. This has led to a surprisingly large presence of Internet cafes, even in the smaller cities and towns. Most of these cafes are very poorly run, providing weak systems and uneven services and almost universally wasting the retail food/drink opportunity.
We're going to develop a model for an Internet cafe that will serve the market's needs better than any existing cafe. We're going to:
- Partner with Starchuck's Coffee, the world's leading on-premises specialty beverage retailer.
- Work with IBN Globo Services to develop retail POS hardware and software for the cafe systems, making them completely zero-administration.
- Put heroin in the coffee and crystal meth in the tea. This should effectively guarantee ease of customer acquisition and guarantee repeat business better than any stupid punch card ever could.
- We will protect and maximize shareholder value by killing anyone who starts doing business in our market. Managers will carry 10mm Glock sidearms. Assistant managers will carry burst-modified Ruger Mini-14 rifles. IT staff may fashion rude shivs from screwdrivers.
Naturally, this is a frivolous example, and not likely to face scrutiny well. In fact, you should have seen me giggle as I typed the words "zero-administration". The point is that a business plan lays out the CEO's vision for success, not the worries of the Director of Operations.
Specifically -- I'm looking for examples of how people have done this before, and how successful their projections were, and the science and formulas behind the plans. I'd like to know the best approach to this problem.
I don't know anything about your business, and so please don't assume I'm talking about your specific case when I say that I believe the critical factor in launching a startup is to have
The right people in
The right places getting
The right things done quickly at
The right times
At least as often as not.
It isn't "not screwing up" or "working really hard" or "doing something cool", although those are the symptoms of a well-run startup. It's the condition of having all of those elements mentioned above happening all at once most of the time.
So anyway, my answer to the question is this: Get someone on your staff who already knows the answer, because that question is fundamental to your business, and you need all the other things that person is likely to know about the Internet services realm, like how to build a business that's better than its competitors at figuring out whom to serve, what to sell them, and what they will pay for it. Making a profit, "to buy cheap and sell dear," is just something you have to do along the way, along with making whatever it is you make well enough that your target market will pay your price.
I'm sorry if this is a little harsh. But in the last year I've experienced two startups and one "big startup", and there's nothing quite so horrifying as to come to a belief that the people on whom you are depending, yourself included, are not the people who could make that business succeed. They aren't bad people, they just aren't the Ones to be There Then doing That. When you realize that, it's my newfound dogmatic belief that you can either become what you must in order to succeed or you can arrange for your replacement. It's the rare Internet startup that will allow you the time to grow into a role during launch; that time is better spent on growing the business or having Nerf gun battles or swilling microbrews under your desk with Aphex Twin leaking out from under your headphones.
Okay, okay, don't flame me, I'm sorry, I shouldn't preach.
I went to http://www.askjeeves.com and typed
How do I develop a business plan for an ISP?
in the search bar and found this:
It's a little dated, but hey, whaddya want for four seconds' worth of work? Just keep in mind that any free advice you get about the fundamentals of your business can be considered common knowledge and won't help you do any better than your competitors who already have the advantage of several years of experience on you; it can only help you close the gap a little.
P.S. If I'm wrong about all this, just smile and thank me for my interest and then go forth and succeed. When you start a business, any business, every new day will bring a new cynic to tell you your pants are on fire. You can either learn to love arguing with them or you can go ahead and prove them wrong. But if you smell smoke, look down.