How to write a business plan

The most useful summary I've read on how to do a business plan. Valuable for your next startup or for justifying an internal project or acquisition.

Kawasaki is going to burn out on his blogging soonner or later, but I hope he keeps his work online. At the moment his is among the best entrepreneurial writing online. (Joel Spolsky and Paul Graham are two other favorites.)

Let the Good Times Roll by Guy Kawasaki: The Zen of Business Plans:

... "# Pitch, then plan. Most people create a business plan, and it's a piece of crap: sixty pages long, fifty-page appendix, full of buzzwords, acronyms, and superficialities like, “All we need is one percent of the market.” Then they create a PowerPoint pitch from it. Is it any wonder why that the plans are lousy when they are based on crappy pitches? The correct sequence is to perfect a pitch (10/20/30), and then write the plan from it. Write this down: A good business plan is an elaboration of a good pitch; a good pitch is not the distillation of good business plan. Why? Because it's much easier to revise a pitch than to revise a plan. Give the pitch a few times, see what works and what doesn't, change the pitch, and then write the plan. Think of your pitch as your outline, and your plan as the full text. How many people write the full text and then write the outline?
# Put in the right stuff. Here's what a business plan should address: Executive Summary (1), Problem (1), Solution (1), Business Model (1), Underlying Magic (1), Marketing and Sales (1), Competition (1), Team (1), Projections (1), Status and Timeline (1), and Conclusion (1). Essentially, this is the same list of topics as a PowerPoint pitch. Those numbers in parenthesis are the ideal lengths for each section; note that they add up to eleven. As you'll see in a few paragraphs, the ideal length of a business plan is twenty pages, so I've given you nine pages extra as a fudge factor.

# Focus on the executive summary. True or false: The most important part of a business plan is the section about the management team. The answer is False.* The executive summary, all one page of it, is the most important part of a business plan. If it isn't fantastic, eyeball-sucking, and pulse-altering, people won't read beyond it to find out who's on your great team, what's your business model, and why your product is curve jumping, paradigm shifting, and revolutionary. You should spend eighty percent of your effort on writing a great executive summary. Most people spend eighty percent of their effort on crafty a one million cell Excel spreadsheet that no one believes.

# Keep it clean. The ideal length of a business plan is twenty pages or less, and this includes the appendix. For every ten pages over twenty pages, you decrease the likelihood that the plan will be read, much less funded, by twenty-five percent. When it comes to business plans, less is more. Many people believe that the purpose of a business plan is to create such shock and awe that investors are begging for wiring instructions; the reality is that the purpose of a a business plan is to get to the next step: continued due diligence with activities such as checking personal and customer references. The tighter the thinking, the shorter the plan; the shorter the plan, the faster it will get read.

# Provide a one-page financial projection plus key metrics. Many business plans contain five year projections with a $100 million top line and such minute levels of detail that the budget for pencils is a line item. Everyone knows that you're pulling numbers out of the air that you think are large enough to be interesting, but not so large as to render urine drug-testing unnecessary. Do everyone a favor: Reduce your Excel hallucinations to one page and provide a forecast of the key metrics of your business--for example, the number of paying customers. These key metrics provide insight into your assumptions. For example, if you're assuming that you'll get twenty percent of the Fortune 500 to buy your product in the first year, I would suggest checking into a rehab program.

Search engines for Patriots

The same government that gave us the extra-legal NSA searches, has also extracted mass search data from MSN, AOL, and Yahoo -- but not Google.

Nobody is all that shocked. When you're online, everyone knows you're a pervert. Expectations of privacy are amusing. As is this satirical web search service:

Patriot Search - Our Search Syntax

The Terrorist Operator

By typing terrorist:true preceding any search query, you tell us and the governments of the world that you are in fact a terrorist, or involved in terrorist activity, or planning to get involved in such activity, or that you once met a terrorist (or you met someone who met a terrorist). If you are no terrorist, you can type terrorist:false. Please note that 'true' is the default value if you
omit the 'terrorist' operator -- after all, everyone is a potential terrorist.

The Bushies just like to watch.

Cringely surveys the Bush surveilance program

Why did Bush bypass FISA? The story he gives doesn't hold water; FISA would have supported his stated goals. So either Bush is mad with power lust or he needed to do something else. Most of us suspect a combination of both, but really more of the latter. He wanted to do untargeted surveilance of some sort. That's the strong consensus of the mainstream geek security community.

The next question is whether the NSA was studying the content of messages, or whether they were studying "message metadata". If it was the latter, they could apply social network tools to study communication networks (directed graphs) and correlate message length and duration with other parameters. The message metadata might then be used to target further surveilance and/or intercepts, with our without FISA approval. Interstingly, depending on how the post-Nixon laws were written, metadata surveilance may have been omitted -- providing a loophole the NSA could exploit.

A secondary question is whether this is a good use of resources. Schneier argues it wasn't, that the available evidence suggests a high level of false positive probes and a lot of wasted attention -- not to mention harm to the 'false positives'. I confess analyzing metadata to focus seconary probes sounds plausibly effective to a novice like me, but this is Schneier's domain.

Now Cringely, one of my favorite tech gurus, weighs in (the title of the article is based on surveilance of the weekly conversations between Hitler and ITT during WW II, a rather shocking and suspect business): (emphases mine)

PBS | I, Cringely . January 19, 2006 - Hitler on Line One

To this point what we have been considering are technically called "intercepts" -- listening to phone calls and recording the information they contain. Most phone taps in the U.S. aren't conducted that way at all. On top of the approximately 3,500 CALEA and FISA intercepts conducted each year, there are another 75,000 domestic phone taps called "pen/traps" by the telephone company.

While interceptions capture the voice portion of a telephone call or the data portion of an electronic communication, such as the content of e-mail, pen/traps capture just the outgoing digits dialed (the pen register portion of the technology) and the numbers of the incoming callers (the trap and trace portion of the technology). In CALEA terms, these are "call-identifying information." [jf: metadata]

Court authorizations for interceptions are difficult to obtain for many reasons. Pen/traps are easy to obtain. While the government has to obtain court authorization to install a pen/trap, the role of the court in this review and approval procedure is merely "ministerial" -- primarily a form of record-keeping. The government has a very low hurdle to meet to obtain judicial approval for pen/traps, and if that hurdle is met, the court MUST approve the order. Pen/traps are very useful in a criminal investigation, and inexpensive compared to a court-approved interception. So, it is not surprising that there are so many more pen/traps than there are interceptions.

To get this far, I had to talk to a lot of former and current telco people, and one thing I learned is that they generally don't like having to do either type of phone tap. Under both laws, telephone companies that do this kind of work are supposed to be reimbursed for it, yet many phone companies never send a bill. Whether that is because of patriotism or fear of liability, I don't know. Many phone companies also outsource their phone taps to smaller firms that specialize in that kind of work. These firms handle the legal paperwork, and generally more than pay for themselves by billing the Feds, too, on behalf of the telco.

It feels a little creepy to me knowing that our telephone systems can be accessed at will by "rent-a-tap" outfits, and that the technology has advanced to the point where such intercepts can apparently be done from a properly-authorized PC.

Is all of this worth worrying about? What led me on this quest in the first place was the fact that I simply couldn't understand why the Administration felt the need to go beyond FISA, given that the court nearly always granted warrants and warrants could be done retroactively. But does it really matter? I didn't know whether to be outraged or bored, and I feared that most Americans were in similar positions.

Given that this is all about National Security, we'll probably never know the full answer. Even if the proper research is conducted and answers obtained, they won't be shared with you or me. But here's a hint from a lawyer who used to be in charge of exactly these compliance issues for one of the largest RBOCs: "While it is true the FISA court approves nearly all applications submitted to it, this is due primarily to the close vetting the DOJ attorneys give to applications before they are submitted to the court. In fact, the FISA appellate court noted that the DOJ standards had been higher than the statute required. I am unaware that the court has 'retroactively' approved any electronic surveillance that was not conducted in an emergency situation. There are four emergency situations enumerated in the statute. Even in an emergency, the government has to apply for approval of what they have already started or in some case finished and these applications have to meet the same strict standards as any other application."

So the probable answer is that the several hundred NSA communication intercepts wouldn't have qualified for submission by the DoJ to the FISA court, and some of those might not have qualified for FISA court orders even if they had been submitted. It looks like the difference between using a rifle or a shotgun, with the Bush Administration clearly preferring the shotgun approach. Only time will tell, though, if what they are doing is legal.

So Cringely argues that it's harder to get intercepts than FISA's record shows, and that there's a low hurdle for monitoring metadata. Interesting. It is interesting that the "dirty work" has been outsourced by phone companies; I suspect those independent firms are staffed by people with some interesting but unstated employment records. The technique of outsourcing the dirty work to the "private sector" has allowed many agencies, including the FBI to bypass the law.

The historical demographics of Iraq: Why don't we know them?

As predicted, the ethnic coalition called "Shia" won the Iraqi election. The ethnic group called "Sunni" are unhappy. They are thought to now constitute about 20% of Iraqis, but western media commonly report that they think they are a majority.

Doesn't anyone find this curious? Evidently not. I tried a Google search on "demographics history Iraq Sunni population fertility" and found nothing of value. Why hasn't some bored journalist spent a day researching this with a librarian?

Iraq is a very young country, with a "slightly" older city - Baghdad. The demographics will be a bit tricky to sort out, but it could be done. My bet is that the Shia population within the rough bounds of modern-day Iraq has been increasingly very quickly over the past 100 years, while the Sunni population has been growing much more slowly due to higher Shia fertility and immigration. This is a typical pattern in which one ethnic group is wealthier and dominant; the sub-group reproduces faster. (For all I know humans are programmed this way.)

I'd further wager that the Sunni's have historically dominated this region, and that about 100 years ago they were about half the population. Lastly I'd bet that the Shia and Sunni represent slightly different genetic populations as well as religious traditions.

Of course I'm probably wrong about all of the above. I have no data. That's the point. How can we have a government so incompetent that the answers to those questions are not well known?

PS. Extra credit: explain how climate shifts and human induced deforestation contributed to the 9/11? Hint: Afghanistan was once relatively fertile.

PPS. I grew up in Quebec. Why would the above seem obvious to me?

The Gore speech

[Update 1/20: BlogThis! did something quite nasty to the encoded search string. Could be yet another bug. I hope I've fixed it.

As of 1/19/2006 there are over 400,000 Google hits on Al Gore We the People Must Save Our Constitution.

Not bad for a speech that the mainstream media has utterly ignored.

There's something about Gore journalists dislike. We suffer for their folly. Whenever I feel some regret about the collapse of the print newspapers, I remember how journalists covered the Gore campaign. Their current peril is not desirable, but it does have a silver lining.

... The President and I agree on one thing. The threat from terrorism is all too real. There is simply no question that we continue to face new challenges in the wake of the attack on September 11th and that we must be ever-vigilant in protecting our citizens from harm.

Where we disagree is on the proposition that we have to break the law or sacrifice our system of government in order to protect Americans from terrorism. When in fact, doing so would make us weaker and more vulnerable.

And remember that once violated, the rule of law is itself in danger. Unless stopped, lawlessness grows. The greater the power of the executive grows, the more difficult it becomes for the other branches to perform their constitutional roles. As the executive acts outside its constitutionally prescribed role and is able to control access to information that would expose its mistakes and reveal errors, it becomes increasingly difficult for the other branches to police its activities. Once that ability is lost, democracy itself is threatened and we become a government of men and not laws...

Rumor has it that the first murder is the hard one. After that, they get easier. The Bush administraiton is a serial constitutional murderer.

PS. David Brin described an alterantive universe in which Gore became President. It was a far better place, except the media hated him and the right wing was launching an indigenous American terrorist movement.

The new doctor shortage - Michigan

The pipeline to produce physicians is so long, and the costs to students so great, that it is not at all surprising that we go through boom and bust cycles. In my career I've seen family practice cycle from startup to boom to bust. Unsurprisingly the cycle may be shifting again, though I wonder what role Michigan's economic and liability issues play in their pending shortage:

Crain's Detroit Business

... The Michigan Department of Community Health on Wednesday said it will create a data clearinghouse of medical professionals to help the state’s health care providers deal with a looming physician shortage.

According to a recent state survey, about 37 percent of Michigan’s physicians are 55 or older, and more than 38 percent of physicians say they plan to practice medicine for only one to 10 more years. A separate state study indicated that Michigan will need to fill more than 100,000 professional and health care jobs in the next decade.

Normal boom/bust cycles, atypical demographic cycles, and the possibly permanent decline in the appeal of primary care practice may conspire to make this coming shortage more severe than most.

The obvious approaches are to train more paramedical staff (NP and PAs), to encourage immigration of more physicians, to do more outsourcing of services overseas (radiology, dermatology, etc), and to move more care to 'disease management' programs. I am confident all these approaches will be tried and all will have a role. I also suspect that, within 10 years, we will reinvent the GP/FP/General Internist/Pediatrician once again -- though possibly under a different "brand".

The publicly traded politician - and other reform proposals

Wow, political reform is back again. For a week. I read one semi-serious proposal that I quite liked. It reminded me of something. Took me a few minutes to remember what.

It turns out that in 1996 I wrote a web page with two radical and semi-serious approaches to reforming politics. The old pages are topical again ...

Campaign Finance Reform: Voluntary Mandated Sharing:

... Campaigns need money. Powerful people need good things. Both needs can be satisfied by transforming politicians into publicly owned corporations. After meeting standard accounting requirements, a politician would be sold through an IPO. The usual futures and options markets would develop. Standard reporting and accounting regulations and SEC enforcement would apply. Cheaters would be delisted, and thus be effectively removed from future campaigns.

Read the page for the other proposal.

A critical military analysis of the war on terrorism

Crooked Timber does a nice job of excerpting a longer post by a military historian

Crooked Timber: � Shadows and Fog

.... To summarize, then—sorry about that—a too-hierarchical, too-orthodox U.S. Army, and U.S. military in general, leans heavily on lumbering equipment, high technology, and major ground offensives against an enemy that relies on tactics that are often not even conventionally military in nature; we mass artillery against threatening letters and infrastructure sabotage. In equipment, doctrine, tactics, and leadership structure, we’re organized for the wrong enemy, in ways that can’t be easily or quickly changed.

The entire excerpt is quite interesting -- well worth reading. The original is a bit long.

BTW, the latest rumor is that Cheney is trying to get Saudi Arabia to fund a UN authorized Egyptian force to save the Iraqi Sunnis after the US pulls out. Blocking Iran is a not small fringe benefit.

The drug discount debacle -- one illustrative story

Just one tiny story in the midst of the immense drug discount card debacle.

The U Share - Medicare-Approved Prescription Drug Discount Card site is one of many associated with the "benefit". It lists, for example, commonly prescribed medications. Alas, any elder (or family member) navigating the list of covered drugs would be perplexed when they clicked on the 'next' button and got a page error. The site builder forgot that UNIX is case specific, and the URL uses an upper case letter when it needed a lower case letter. Of course there's no link to a webmaster to tell them what the bug is.

No feedback loop. Runaway complexity. Debacle squared.

Getting an ovation for your speech

I've never gotten a standing ovation for a speech or lecture, but I'm no Guy Kawaki. When I do some of what he says here, however, I do get applause. I can live with that.

A terrific list of tips. Use them for your next lecture, presentation, or even speech.

Kawasaki's blog, by the way, is terrific. I recommend starting from the very beginning.

Exercise and Alzheimer's: How to fix the demented media

I read yet another bulletin declaring that "exercise can prevent alzheimer's". Sigh. The elderly who exercise 3 times a week are 50% less likely to be diagnosed with dementia. All that means is that it's worth funding more research. My bet is that a loss of commitment to exercise is an early indicator of a dementing process.

Some of the stupidest coverage came from the Wall Street Journal. I was feeling annoyable today, so I did a quick study. Someone who needs a pub should write this up as a letter to Lancet. I bet they'd get a nice cite.

I googled on the news: exercise alzheimer's - Google News:

Exercise Research
WOWT, NE - 18 hours ago
... More research is needed to better understand how exercise may help protect against diseases like Alzheimer's, but for now researchers say one thing is clear ...

Research Notebook OregonLive.com, OR - 6 hours ago ... years, 158 had developed dementia, including 107 diagnosed with Alzheimer's disease ... older adults who exercise Another study that looked at physical activity in ...

Study: Exercise May Reduce Risk of Alzheimer's Disease ABC News - Jan 16, 2006 ... Researchers emphasize that this study is not proof that exercise reduces the risk of Alzheimer's disease, but they say the results are consistent with several ...

Alzheimer's Disease May Be Prevented With Exercise Fashion Monitor Toronto, Canada - 23 hours ago ... The six core strategies to prevent Alzheimer's disease include exercise, diet, a program of vitamin and herbal supplementation, regular brain stimulation, a ... Exercise Not Enough to Prevent Alzheimer's Disease PR Web (press release) all 3 related »

Exercise Significantly Reduces Risk of Dementia in Senior Citizens SeniorJournal.com, TX - Jan 16, 2006 ... growing evidence that exercise – particularly if it starts early and is maintained over time - is beneficial in preventing dementia and Alzheimer’s disease ...

Health Roundup: Alzheimer’s And Exercise, Sibling Drinking ... NBC 10.com, PA - Jan 16, 2006 ... The things that reduce our risk for Alzheimer's are: exercise, reducing our cholesterol with statins, eating a lower fat diet and lowering our blood pressure ...

Exercise associated with reduced risk of dementia in older people
EurekAlert (press release), DC - Jan 16, 2006
... Additional study also may provide information on the possible merits of varying types of exercise. For information about Alzheimer's disease, visit the ...

It turns out that about half of the top-ranking Google results used "may" and a few even used "associated with" (they get five stars). The rest, alas, were as dismal as the Wall Street Journal.

So here's how to shame the media into doing better. JAMA should run a report after each report of a finding associated with reduced cancer, dementia, etc. The journalist can simply execute a Google News search and extract the titles. Titles are then ranked for words like "may" and (best) "associated with". Report the results by dividing press into "Good", "Bad" and "Ugly" categories.

After six months on the "Ugly" list, the Wall Street Journal gets a special prize.

Eventually, they improve.

Good-bye cross country skiing

The first time I tried cross-country skiing, I wasn't done healing from chest surgery. It made my tentative pole plans particularly poignant -- I paid for each slip. Maybe that's why I remember that 1970s day particularly well. It was the start of a great relationship. I was never a competitive skier, but I loved skiing the skinny skis on skinny woods trails (classic only please -- no highways for me). It was a great sport for an outing in Montreal's big city parks, and a spectacular sport in the stubby Laurentians.

In those days we had months of decent snow cover in Quebec. In the early 1980s, I even had one very memorable ski outing in the San Gabriel mountains overlooking Los Angeles. Things were turning though. In central Pennsylvania, where I did my residency training, the nordic ski resorts were closing by the late 1980s. Since then it's been mostly downhill.

This winter looked like it might be an exception; we some great snow cover in the twin cities before Christmas. I saw a park packed with skiers. Alas, the weather has returned to form -- gray and mild. The Twin Cities now has the climate of central Indiana or Iowa.

There will still be snowy days in Saint Paul, and even some days below zero, but the world is moving on. Global Climate Change may mean Europe gets much colder, but for the northern US it mostly means milder weather.

I don't think our kids will ever cross country ski -- unless we move to altitude or to Houghton Michigan. I do miss it though.

iPod and iTunes: an unexpected effect

Results 1 - 30 of about 524,000,000 for ipod [2]

I have a love/hate relationship with Apple, as compared to a hate/hate relationship with Microsoft. I cannot deny, though, that Apple has brought one good new thing to an old dog -- music.

The iPod/iTunes combination has transformed an all-but-forgotten CD collection (bought, inherited [1], married) into something I'm getting to know. This is novel for me -- I was never a knowledgeable listener. It's the iTunes playlist, rating, listening, refining interaction that's helped me learn the collection, and the iPod technology has let me integrate it into a compressed modern existence.

Years ago I liked Joni Mitchell -- but I confess I'd never really paid much attention to her music. She's fallen a long way since I started hearing the lyrics. Joan Baez, on the other hand, has returned from the depths. The more I hear him, the more I like Springsteen - including his unfashionable mature work. Stan Rogers wears well. Rock, country, folk, jazz, classical, eventually opera. Names that are familiar, and those that almost no-one listens to. New and old. There's a lot to explore in 500 years of music.

The difference, which radio of any form cannot bring, is learning the music.

[1] The inheritance of digital music libraries will be an interesting story to track. There's a lot of music out there on CD, and it's not clear that new technologies will greatly change our listening experience. Unlike video, audio recording started to converge on human perceptual limits over 15 years ago. The staggering volume of what's already been purchased by families, and rarely discarded, may be as big an issue for the industry as digital file sharing. The fact that iPod/iTunes greatly enhances the value of existing music collections is very ominous for the music industry. Short of preventing encoding of extant CDs, is there anything the industry can do to escape this trap? I suspect recent falling digital music sales may be in good part due to users rediscovering old collections.

[2] A half-billion hits on Google? That's a lot of splogs!

Iran's program: what's so complicated?

The WSJ has another somewhat dull article on Iran's nuclear weapons program. There's been remarkably little informative discussion.

Iran wants a nuclear weapon and they'll likely get one sooner or later. Many nations would like Iran to get its nuke as far in the future as possible, ideally after a regime change. All the efforts being expended are to delay the acquisition date. The only real question is whether China and Russia will cooperate. That cooperation will depend on a lot of trading and swapping with the US and Europe.

One can argue that Bush's cavalier attitude towards treaties of all types, and the NPT in particular, hasn't helped. I don't have much of an opinion either way. Once Pakistan had its bomb (mostly built pre-Bush), and once the US invaded Iraq, the die was pretty much cast.

All this chatter about treaty obligations etc etc is mostly irrelevant. I can imagine that if China and Russia fully cooperated that Iran's nuclear program could be delayed for a few years, which might just allow for a less whacky Iranian President. (Maybe we'd get a less whacky US president too.)

Update 11/18/06: It looks like Russia is going to block sanctions, so it's pretty much game over now. There's nothing quite like fundamentalist zealots with nuclear weapons. At least Iranian fundamentalists don't seem to have the end-time enthusiasms of our religious extremists.

If Al Gore had been our president, would engagement with Iran have prevented the "election" of their current nut-case president? We'll never know.

Why the democrats should filibuster Alito

Not because of Roe v Wade. Because Alito supports Bush signing a bill banning torture while issuing a 'signing statement' that he is not obliged to abide by it:

The Imperial Presidency at Work - New York Times

...Both of the offensive theories at work here - that a president's intent in signing a bill trumps the intent of Congress in writing it, and that a president can claim power without restriction or supervision by the courts or Congress - are pet theories of Judge Samuel Alito, the man Mr. Bush chose to tilt the Supreme Court to the right.The administration's behavior shows how high and immediate the stakes are in the Alito nomination, and how urgent it is for Congress to curtail Mr. Bush's expansion of power. Nothing in the national consensus to combat terrorism after 9/11 envisioned the unilateral rewriting of more than 200 years of tradition and law by one president embarked on an ideological crusade.

A filibuster would likely fail, but it is a noble cause and, given where Bush is going, history may judge it well.