How to Write a Business Plan for a Startup with Ashutosh Garg

How to Write a Business Plan for a Startup with Ashutosh Garg


We have talked about what it takes to be an
entrepreneur and when is the right time for an entrepreneur to take the plunge
to start his business. Today we are going to talk about the next most logical step
in the startup journey, How to write a business plan? Hello sir,
so far I have been working somewhere and today I have decided that I’m going to
take the plunge and I will start my business, so the next step is to write my
business plan where should I start? So you know already I’ve met lots of young
entrepreneurs who get very intimidated when they have to write a business plan, the simplest way to think of a business plan is to, is an articulation
of the multiple steps that you want to take in doing your business, right so
therefore is there’s nothing complicated about it there is no rocket science
about writing a business plan. What you really have to do is to start putting
down your thoughts and let me try and explain to you what normally would
happen when you’re thinking of a plan you when you start thinking of a plan
you say what business do you want to be in, you say who are your competitors, what is
the government environment for that particular type of business that you
want to be in, how easy or difficult it is for competition to get in later on,
right and then you come to the last point which is how much money do I need,
right, so when I wrote my first business plan for Guardian, I had a vision which
was that I want to build India’s largest pharmacy chain which would enable
customers to be able to shop themselves I also wanted to make sure that the
employees of Guardian would be able to say that this is one of the best places
to work in and finally I wanted to say in a country that has been plagued with
fake medicines I wanted to say the Guardian would be a place which would
give 100 percent reliable medicines. So my first line of my business plan was
I want to build boots, boots is one of the largest British pharmacy chain I
want to build boots in India and everything started to flow from that, how would my stores look how would my merchandising look, what would my
colleagues and store wear and so on so forth
so when you are going to write a business plan think of everything that
is going on in your mind and put it down in paper. So a business plan is
essentially my vision document that’s going to drive me I am not an expert in
writing business plan I I may have a dream I may have a vision but I really
don’t know what all goes in writing a business plan, should I write my own
business plan or should I hire a professional? So remember that a business
plan is not a document that has to be filed in the library, it is also not a
document that has to be sent for awards because it has got fantastic English,
I’ve always believed that the entrepreneur must write his or her own
business plan because only then will the business plan be a living document that
it is supposed to be right it must be able to meet first your own aspirations.
What am I setting out to do and what do I, how do I, will I get there, by all
means look when you google business plan you’ll get millions of options in some
point you know zero zero three or some nanoseconds, Google will tell you here are
all the options, read those, get your ideas but when it comes to putting pen
to paper or put your finger on your keyboard instead of pen to paper now
make sure that you write every single word yourself, there is nothing
complicated about writing a business plan, there is nothing complicated about
putting out a document that will work and be your guiding document as you
build your business. Okay, but while writing the business plan
myself I might not have access to all the data points I have to make
assumptions, is it okay to make such assumptions or should I do a market
research and get on to all those things that big companies do before launching a
product into the market or a company into the market? So Arani, market is
always important I would never say it’s not important, knowledge of your market is
very important but when you are starting a business don’t get overwhelmed by data
and research as I mentioned a business plan is a living document and therefore,
right through your life of the business, you will keep on modifying it,
you will keep on enhancing it, you will keep on adding to it, you will keep on
deleting from it, no first business plan is ever the best business plan or is
ever the right business plan, what is very important is what you asked me in
your question is, should I make assumptions, make assumptions but record the assumptions you’re making very carefully, because one year later you would
have forgotten the assumptions you’ve made and then you will wonder how do I
justify what I have written so once you have written out your assumption and the
assumption could be that I want to build you know 15 stores in gurgaon, now if that
is your assumption then a lot of things will follow 15 stores means the market
must be there, the real estate must be there, you must have trained staff, you
must have enough consumers, so if you go and if I say I’m going to put 15
stores out in the desert without no consumers then obviously my business
cannot work so whatever assumption I’m making must
be linked to that particular aspect of the business plan and that is going to
that is what is going to bring some reality into your plan. So the other
part of writing a business plan other than being
a vision document is planning my finances, now I’m assuming for most
entrepreneurs out there, their initial funding is going to come from their
savings. How far out should I plan to use my
savings and when should I ask for money? The topic of raising money is a whole
new ballgame and I’m sure we’ll cover this in great detail in one of our
podcasts but to talk about when to you know how much money you should use a lot
of entrepreneurs bootstrap their business basically meaning that they dip
into their savings, they dip into whatever is there other resources and
they start to do their business. I am firmly of the view that unless you know
that you’re going to strike oil right or you’re going to win big in in roulette
or in you know in a casino I don’t think any entrepreneur should bet their bottom
dollar to say that I’m going to put everything I have into this, and
that’s because you have to be sensible when you make an investment you will be
sensible for yourself and if you’re a family you gotta be sensible for them
right you cannot, because of your own desire to do everything possible, make
the mistake of betting everything you have. So ego should not come in between
my planning? Absolutely, and just to go back to your comment that you know the
business plan is your vision document I want to just make small correction. The
vision document is where you want to get but the business plan is much more than
that, it outlines all the steps that you want to take to get there, so the vision is, say, I want to, I want to be able to build a social media
company which is going to be the best in the world, right he’s giving you an
example now what are all the steps that you would want to take in that and that
is going to be that you know you’ve got to have content, you’ve got to have
people who will come and talk to you, you’ve got to have funding available, you
got to be able to reach out to consumers who will listen to your content, you will
have you know the databases available and all the things that will go into
building and if you were to look at your own business there are so many things
that you do in your business on a daily basis which have to be articulated in
your business plan. Right, now we were talking about briefly other than it
being a vision document it has to lay down the path now in in my business plan
I realized shortly after launching my business that
it’s not right there’s something wrong in my plan that is prohibiting me from
achieving my vision now what do I do in such cases should I stick to my plan
because you know I thought a great deal about it I consulted people while
writing it or should I modify it and, and how often should I modify if I if I
modify at all? So a business plan must be modified because every day once
you start your business you learn new things if you had all the answers then
it’s probably not a business you want to be in, because then everyone has the
same set of answers your entrepreneurial journey is a journey of
exploration, it’s a journey of trying to achieve what you have the vision for and
as you go step by step there will be many things that will come across you
and a lot of them will make you change your core assumptions that you know I
thought I will do this I assume this will happen and six months later you may
find that may not happen, so you must be ready to make changes in
your business plan having said that, changing your business
plan on a daily basis is not a wise idea that means you haven’t thought through,
you know, what your business plan should be. Right. Ideally when you and
your team sit down to review a plan it should be done once a quarter and
whether once a quarter is when you can make course correction and as you get
better and better at it you will suddenly realize that by the time you’re
in your fourth or fifth or sixth quarter you’re being able to predict fairly
accurately, then the challenge will come if there are situations beyond your
control and what could those situations be?
They could be either some action or a law that has been enacted by the
government, which you’ve no idea about, they could be some natural
calamity that may occur may affect your business, there could be a situation where
some of your very key team members decide to walk out and you’re suddenly
left without having planned a decent enough succession, so if those kind of
serious assumptions take place then quickly review your business plan
otherwise try and keep it every quarter. Okay, while making mistakes of course
every business makes mistakes especially in the initial years, now how do I plan
for losses? You know losses are a part of life of every startup before your
revenue start to flow in, before your profits start to flow in, you are bound
to make losses, what I tell everybody is that it is better to plan for losses
than to get surprises so if you have planned that you’re going to lose 3 lakh
rupees in the year and if you lose 30, then you’ve got a serious problem.
Right. But if you’ve decided you know planned for losses at 3 and you go to 4
or you make it 2 then at least you have planned correctly and they are not going
to be some incredible shocks where you suddenly say how the hell am I going to
manage this big loss. Okay, so plan for your loss there is
absolutely no problem in making a loss as long as there is light at the end of
the tunnel which says that at the end of six months, twelve months, eighteen months whatever
is your own appetite for the loss as long as that is there, go ahead and
implement and don’t be shy of losses. Okay sir, thank you. Now I have a bonus
question for you let’s take example of those startups
that are not really planned I’ll give you my example seven years back when I,
when I started I saw an opportunity and I realized that to do this I need to
leave my studies and I need to get on to this and I did not really have a
definite business plan I saw an opportunity and I took it, now when
should you advise to do some– someone to do that, or if someone
does that should we make a business plan later on or should we just go with the
flow and and take the route that that I have been taking? So I’d see no reason
why, you know people shouldn’t follow the path you did, I mean you
know, iconic names like Jobs and Gates all of them worked out of their garages
and I’m sure none of them wrote business plans before they started implementing
their ideas. Right. But once you have started down your journey of the
business that you have wanted to do then you have to start bringing in some
sanity into your business plan, which will start giving direction to you right and
also write out or lay out a clear path for your organization which has got a
lot of employees. Right. So they must know what is the direction you’re going, being
a maverick in the early days of your entrepreneurial journey is fantastic but
every maverick has to start as his team start to grow larger has to start
getting straitjacketed into a business that will be able to
guide what you have started to create. I’ve
known several people who were Mavericks who then become serial entrepreneurs,
they don’t like being straitjacketed they don’t like a business plan and
therefore what they do is at the end of three years four years they sell their
whole business start something new, because that’s the kind of people they are and
it has often been seen that people who create new businesses are not
necessarily the people who run them later on. Alright, so thank you so
much for your time.

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