What is the first thing you need to know about business plans?  You may not be asked for one, but having one will never hurt you.  Brad Feld’s take is that he only reads the executive summaryGuy Kawasaki’s suggestions are also incredibly helpful, especially the summary at the end.  In practice, a good executive summary and pitch deck can take you a long way.  Guy has two great posts on writing a business plan, from 2006 and 2007.

Financial projections are an extremely tricky part of any business plan or executive summary.  The advice from the experts, luckily, is very formidable.  Guy Kawasaki has his take on financial projections, complete with an Excel spreadsheet from Redfin on his post.  Brad Feld has a humorous slant on financial projections, with a great summary about their necessity.

We recommend you spend a lot of time on the business model, and especially with fielding questions about it.  Peter Rip has a great post on (and visualization of) business models.  If you are a web business, another great post is on Fred Wilson’s blog.

Related to the business model for technology companies is the commercialization plan.  Guy Kawasaki has a great post on this topic.

Competition exists, and investors love to ask questions about your competitors.  Prepare yourself with this post by David Hornik.

One area that needs some additional attention is revenue recognition, with regards to GAAP and changes to GAAP that Brad’s posts greatly clarify.

Executive Summaries

Guy Kawasaki has a very thorough post on executive summaries.  If you are not planning on initially writing a business plan, the executive summary becomes even more important.

The Pitch

What to do:  Guy Kawasaki’s advice, David Hornik’s advice

What not to do: David Hornik’s advice

Saying “I don’t know”:  Josh Kopelman’s advice, Brad Feld’s comments

Intellectual Property and Patents

In an ultra-simplistic sense, there are four levels of Intellectual Property.  From strongest to weakest, they are:  Patents, Trademarks, Copyrights, and Trade Secrets.

  1. Patents protect inventions, designs, and business methods.  They do not provide the right for you, but rather prevent others from making it in the same manner.
  2. Trademarks provide source identification with the potential to create consumer goodwill.  It is the responsibility of the trademark owner to protect the trademark.  If it is not protected, you lose the trademark.
  3. Copyrights protect tangible expression of original ideas.  Said another way, you protect the literal copy of the idea, but not the idea itself.
  4. Trade Secrets are secret business information kept (hopefully) within a company.  It is the protection of the secret sauce, or the secret formula.

For patents in the United States, go to the USPTO web-site to perform searches for existing or published applications.  In Europe, the equivalent site is here.

With regards to all Intellectual Property, the point is defensibility and Guy Kawasaki has a great post on the subject.  Here is a counterpoint to Guy’s post.  Another investor weighing in on the discussion is Fred Wilson with his post.  Recent news of potential invalidation of patent judgements from 2000 on the New York Times.  Lastly, no discussion on patents would be complete without Brad Feld’s many posts (linked as a search result).