Strategic Planning

Purpose

We’ve got a market opportunity that we understand, are excited about, and are pursuing with product experiments! 🎉 Now what?

It’s time to make a plan and amass the resources for executing it. 99.99% of the time that means attracting partners – a team to build it, investors, vendors, and of course, customers

Each of these stakeholders will want to know what we know and how we know it. Why is this project worth their time, energy, and/or money?

Business Plan

Why is this a business and not a non-profit or a hobby? How will we make money? When will we start making money? How much money do we think we can ultimately be making?

How these questions typically break down is along three metrics: 1. Burn rate 🔥 What are your monthly costs today and over time. 1. Cost-to-acquire (CAC) 💸 How much do you have to invest to acquire a single customer? This could be in sales salary, marketing spend, discount incentives, etc. 1. Lifetime Value (LTV) 💰 How much will you make from a single customer over the lifetime of their account with you?

Answering these questions can be really difficult at the outset, when you don’t have users or customers and you don’t know much about how you’re going to get them or what you’re going to charge them for. You can start by looking at industry level trends. If you have a direct-to-consumer (D2C) app, look at average CAC and LTV for D2C apps. Without the data you’ll have once you have customers and users, averages are a safe bet.

Even with product experiments in production and clarity around potential markets to pursue, many unknowns will still remain and that’s okay. Once you do have these things in place, you can get a level more granular by looking at your actual user acquisition costs, retention dynamics, and monetization plans, which will help you move from assumptions to a data-driven plan.

Regardless of the fidelity of your inputs, you need to attempt to create financial projections, identify key metrics, and outline a hiring roadmap based on business needs. Going through this exercise clarifies the path to profitability and informs decisions about customer acquisition and product development.

Having confidence in the product and plan will proliferate through any conversation you have with someone about your business. Instead of begging people to try the product, you’ll be able to understand where exactly you bring value and can help them. Instead of hoping any investor will give you money, you’ll be able to see which ones are a match for you earlier to avoid wasting their and your time. ✨

A lean canvas can be a great exercise to complete as part of this planning as well. Don’t feel pressured to fill this out in one session, but rather think of it as a document that you’re working to fill out over the course of 3-6 months. Going through this playbook process will cover a lot of this work, but also help you identify where there are gaps. This should be separate from the more specific business modeling you’ll also be doing. - Here is an example of a lean canvas - One of our partners, Forecastr, has fantastic financial project and modeling templates you can use

Product Plan

Using the opportunity map from the work we’ve already done around finding product focus, we can start to think about how to create a concrete plan. This starts with looking at who you are, where you are, and then assessing what kind of resources you’ll need in order to build an MVP.

Additional Resources

• Dynamics to consider when planning an MVP
• Choosing a tech stack
• From zero to MVP
• How to define and prioritize features for your MVP
• Before you MVP

Team Building

Who do we need on the team in order to execute our vision?

It’s time to reap the rewards of all the in-depth business planning you’ve done. Working backwards from where you want to get, and looking at where the gaps are in your current team’s knowledge: Who will you need to successfully complete the various phases of your product plan?

Once you have a plan you can start thinking about what will accelerate that plan, e.g. what if you made your first hire two months earlier? 🚤

Additional Resources

• DEI and inclusive hiring
• A functioning remote team doesn’t happen by accident
• Prioritizing and team building to define products
• What to look for in a startup CTO
• Build or buy? Is it core to the business

Fundraising

What financial resources will it take to get where we’re going?

Since we’ve already developed a business plan and identified the market opportunity 🎉, having the numbers around fundraising should come easily at this point. Will you require VC funding or can you actually bootstrap this thing? Or, have you discovered the economics of what you’ve been working on are …impossible? While this can feel discouraging, it’s much better to learn this early and before you’ve invested time and other resources going down this path. Taking a look at all the data you have, are there levers to pull that can make the economics work in your favor?

Only when you actually do the work to look at it thoroughly will you understand what kind of investment you need (if any). Sometimes you’ll realize you can bootstrap it, sometimes you realize it’s all wrong, sometimes it’s a VC-backable business. You might be thinking, but it’s too early, I need to worry about creating something of value first! And although that is true, a business plan can steer you better and faster so that you can figure out what you need to learn. Where there are gaps, you now can ask yourself, “How can I answer that question?” which in turn creates a plan for how to move forward.

If you do decide to seek outside investment, you will eventually need a pitch. There is no shortage of resources out there telling you what should be in that deck, how it should look and flow, etc. We only want to add the point here that it is the substance of your argument that matters: Why is your business a good investment? Some people jump into creating a pitch deck before they’ve crafted that argument, which can distract from the purpose of the artifact. You might think that a pitch deck is the perfect opportunity to show off your awesome branding and create a visually stunning presentation that will leave a lasting impression, but your efforts are better allocated on the content. To even further prevent a rabbit hole of visual design decisions and critiques, it’s helpful to use a separate place to plan out content first. Think of it as a chance to prove to potential investors that your priorities lie in the substance of the product.

This Opportunity Framework Template Doc is a great place to start. If you get through this whole playbook you should be in a good position to fill it out. Once you do, transferring the content into a pitch deck will be straightforward because you have the content ready. Depending on how excited you are about fancy branding, it’ll be either fortunate or unfortunate that you can just select a default slide theme and make your content from the Opportunity Framework fit in a deck format.