This article was originally published on Inc.com, and written by Jenn Houser.

I spoke recently at MIT’s Sloan School of Management about how to build an insanely great founding team. This subject is a personal favorite (and a popular coaching topic here at UpStart Bootcamp) so I’d like to share my thinking…and hope you’ll do the same!

First, what is a founding team and why should it be insanely great? A founding team helps you storm the castle every day. You’re married to your co-founders, emotionally and financially. Chosen well, no one will work harder or care more about your company. The job of a founding team is to learn what works and to recognize when or how to change it. Founders often earn equity only—rather than a salary—until key financial goals are met. Early on, founders are one of the biggest reasons you succeed or fail. Over time, they also set your company culture, which impacts your whole business and is incredibly hard to change. No doubt, you want an insanely great team.

What characteristics should you look for to build this insanely great team?

1. The right skills to go the distance: Identify the three to five primary business operations you must get right in the next three years at least. Then look for someone with the skills to lead each of those for the next three years, preferably with a proven track record. (Translation: investors will be game to fund that person, and you.) Avoid the common mistakes of outsourcing, or hiring an unqualified friend to lead the critical areas of your business.

2. A hands-on approach: A co-founder should want to be hands-on doing the work, not just leading it. It may be months before you bring on other employees. Even a co-founder who manages a team needs to be able to roll up his or her sleeves and get dirty with the details to ensure the start-up hits, and exceeds, goals.

3. Can-do problem-solvers: The best entrepreneurs I know are highly curious, and driven to solve problems in a positive way. This is what gets them going in the morning, and keeps them up all night. Rather than stop them, roadblocks inspire their creativity. These people are excited to work with other problem solvers, and get frustrated by people who don’t share this trait. A team of problem solvers has an exponential effect. A dud rains on the parade.

4. Hunger is a good thing. Ego, not so much. You want co-founders who are looking to make a mark in terms of money, reputation, or other personal goals. Individual performance rarely succeeds (otherwise you’d go it alone!) and collaboration increases your chances of success. Ego can eat away at collaboration so look for people who can leave it at the door. Not sure? Ask them about a success working with others and pay attention to how many times they say “I” versus “we.” You can also ask references.

5. Values, goals, and risk: How you do the work is as important as the work you do. You need to trust your co-founders and that begins by being on the same page about values, goals, and risk tolerance. For example, talk about how you’re going to resolve differences because you know you’re going to have them. And about how you’ll handle ethical dilemmas, like honoring an agreement when not doing so would be financially beneficial.

6. Smarts and passion can trump experience (despite what I said earlier). Smarts plus passion is the start-up secret sauce. Pass on anyone without this combo as a co-founder. Period. In a perfect world, co-founders have everything listed here, and more. In the real world, if you find a candidate with all I’ve mentioned, as well as wicked smarts and passion for your idea—but that person lacks the exact right past work experience—don’t be afraid to plunge. Smarts and passion will help him or her figure it all out.

What’s on the top of your list for an insanely great founding team?

This article was originally published on Inc.com, written by Jenn Houser.

A few days ago, I met Ben, a first-time founder who’s been working on his business idea for 10 months. I asked him to give me the two minute overview of his business idea (or the “elevator pitch” in investor speak). Instead, Ben spent the next ten minutes telling me all about his product, with great passion. So I asked him a few questions about his business model, competitors, unmet customer needs, and marketing plans. But he couldn’t answer any of those questions and just talked more about his product . Then I asked him if he had a business plan. He said no, he’d do that when he was getting ready to raise money. I asked how he was deciding what to do in the meantime. He lit up and told me all the things he was going to add to his product next.

Ben finally asked me what I thought of his plans. As nicely as possible, I replied that I thought he was planning his company using the stereotypical male approach to driving: Never stopping for directions or checking to see if he was going in the right direction. I told him he needed to plan like a woman.

Here’s what I meant by that.

Make a game plan before you start out. If you’re planning a business, you need a business plan, and you should write it down. No, I don’t mean you need to write a 40-page Word .doc that no one will ever read. However, you should create a 15-page PowerPoint deck that covers each of the key topics essential for any business, including a clear roadmap for how you’re going to build the business out over the first few years. This should be one of the first things you do as you start your business.

Admit what you don’t know. No one knows everything needed to start and run a business. The trick is to figure out what you already know, what you don’t know, and how you’ll fill in the gaps. For example, if you need help building your plan, talk to others who have done it before. It will save you tons of time and help you avoid common missteps. Or, when making your business plan, you may realize that the business requires consumer marketing but that you don’t know beans about it. Plan to have a partner who’s an expert. Not sure what customers will pay for a product like yours? Talk to those who have sold something similar to the same customers.

Ask for help along the way. Once you have your plan, you should talk to others for feedback. Good people to talk to are investors in similar companies, people who know your industry well, and your customers. You’ll likely hear a lot of good things, but make sure you listen to their concerns and ask them what they think would work better. Tell them what you need to get to the next level. That’s a great way to find co-founders, investors, partners, and more.  They’ll give you all the information you need to get where you’re going.

Be willing to change your mind. When you get feedback, be willing to change your plan. This is called pivoting. Don’t worry, this is normal and every start-up changes plans a number of times. The trick here is to validate the information to make sure you should pivot, and how you should pivot.  Do not fall prey to the idea d’jour. And be willing to say “no” (or “not now”) to some of the feedback you get. It’s important to have the right plan and to be able to make progress against it so you achieve your goals.

This article was originally published on Inc.com.

Entrepreneurs are a courageous bunch—except when it comes to math. I’ve seen many notoriously tough senior executives shudder at the prospect of running financial projections for their business plans. So I’ve developed a much kinder, simpler guide to help you crunch the numbers that matter most.

Break-Even Analysis
The most important numbers for a start-up are often the most basic. Among them: Predicting what it will take to have more money coming in per month than going out. Get that wrong, and you could find yourself out of cash, and out of business.

Start by estimating the revenues generated by an average sale. Then subtract the costs that change with each transaction, like sales commissions and costs of producing the products sold. The result is your “unit contribution.” Next, predict your monthly overhead, or expenses that don’t vary directly with sales volume, such as rent, salaries, utilities, legal fees, and accounting expenses. Finally, divide your monthly overhead by your unit contribution. That number will tell you how many transactions you’ll need per month to break-even.

Now for the analysis. Is that a realistic sales target? When do you think you’ll hit it? What resources will you need to get there? How much cash will you burn through in the meantime?

Marketing Efficiency
If you reach customers directly—as opposed to selling your products to a wholesaler or retailer that will then sell to customers—then make sure each of them brings in more money than it costs you to get them in the door. Get that basic number wrong, and no amount of sales volume will save you.

First, estimate the cost of acquiring one customer, by researching similar companies, and forming a hypothesis you’ll test and hone over time. Then, estimate the lifetime value per customer. Predict how long an average customer will stick around, and how much unit contribution they’ll generate during that time. Ideally, the lifetime value of a customer should be three or more times greater than the cost of acquiring a customer.

Financial Projections
Projecting your financials will help you develop a sense for how to expect money to flow in and out of your business over the first few years. The numbers here are very difficult to predict, so don’t waste too much time on them. Instead, run the numbers in a simple way, and adjust them as you get real revenue and expense data. If you don’t understand the basics of finance and accounting, or know how to use a spreadsheet program like Excel, you should probably get help. But make sure you understand how the equations work, and what they mean for your business. Here are the most important takeaways from your financial projections:

• Opportunity to scale: While it’s nearly impossible to predict how big your company can get, it’s helpful to make an order of magnitude estimate (Are you shooting for sales of $1 million, $10 million, or $100 million?). That will help investors, partners, and other stakeholders grasp the attractiveness of your opportunity and help them know that if things go well the rewards will be worth the risks. Also, make sure your scale is reasonable. One way to do this is to look at comparable companies. How long did it take them to reach a similar size, and how much did it cost them?
• Capital requirements: It’s important to estimate how much money you’ll need over the course of the next year in order to break-even. That way, you can get enough cash in the bank to allow you to focus on running the business for a while before needing to spend your energy lining up more financing.

You can always go deeper, but understanding these basic numbers will help you make smarter choices without getting bogged down in analysis-paralysis.

This article was originally published on Inc.com.

Some of the most important things in life don’t come with instruction manuals: homes, spouses, kids, and start-ups are a few. That’s why I created this start-up road map. Inspired by the lean startup approach often favored by today’s tech entrepreneurs, the principles apply to any industry.

1. Come up with an idea. Pick an idea that fits your passions, goals, strengths, resources, and tolerance for risk. But keep in mind that your initial idea is just a hypothesis. Don’t fall in love with it just yet.

2. Think through all angles. Evaluate the opportunity like an investor would—in an objective, thorough, analytical way. Who are the customers and what do they need? How big is the opportunity? Is the timing right? What will it take to execute? Is the payoff worth the risk? What’s the business model? A rough business plan is a great way to make sure you’ve covered all your bases. Here’s a free tool you can use to make sure yours is comprehensive.

3. Get feedback. Find people who know the market, the business model, the competitors and predecessors—people who have been there, done that, and can help you understand what works and what doesn’t in the real world. Also, talk to customers—people in your core target market—and find out what they think about your hypothesis. You’ll learn lots more once you get a product to market, but this initial research will increase your chances of starting out on the right path.

4. Respond to feedback. Make any necessary changes to your business plan, product, and go-to-market strategy.  Run some numbers to get a sense of how much capital you’ll need to reach key milestones. Develop an implementation plan with your most important goals over the next few months, and determine whom you need on your team to execute that plan.

5. Build a basic product. When you envision the product or service you ultimately want to offer, it probably has a slick design, and a full set of features. Keep that ultimate vision on the back burner for now. Instead, strip the concept down to the bare minimum offering to address the needs of your core customers. Build that basic product as quickly and inexpensively as you can.

6. Open shop. It’s tempting to wait until your product is ‘perfect’ to start selling it. Instead, realize ‘perfect is the enemy of good enough’. Until your product is out in the market, you’re flying blind, spending time and money with a limited ability to learn how customers react. Make a core product and get it to market quickly.

7. Test what you’ve created. With products in market, you can figure out how to match your offerings with customer needs. To do that, test elements like pricing, branding, features, and customer experiences. Next, find a cost-effective, repeatable way to attract customers by experimenting with marketing messages, promotions, sales pitches, and distribution channels. Measure the results and draw conclusions.

8. Make adjustments. Once you learn which aspects of your product and marketing you got wrong, you’ll want to fix them, of course. But hopefully you will have gotten some things right, too, and you’ll want to leave those intact. To do both simultaneously, you’ll tweak or ‘pivot’ your approach.

9. Get ready to grow. Revisit your business plan, and update your product, team, marketing, implementation, and finance strategies. Gather resources you’ll need to expand. If you intend to raise capital, this is a good time. Your pitch to investors now sounds something like, ‘We figured out how to get new customers for $x, and make 3$x from each one. With such and such amount of money, we can grow this big, this fast.’ That’s a winning pitch.

10. Stomp on the start-up accelerator. With a market-tested plan and resources in place, it’s time to expand. Make sure your team knows and believes in where you’re heading. Check that everyone understands what’s expected and that they have what they need to get it done.

This article originally appeared on Inc.com.

Business plans take many forms. To some, a business plan is a 50-page document detailing the company’s financial plans for the next five years. To others, it could be a drawing on a napkin, an idea, or prototype. Or, it might exist only in concept: For many tech start-ups right now, business plans are considered a waste of time—they’re even downright uncool. After all, Facebook didn’t have a business plan at the beginning. Bootstrappers tend to shun business plans, too. We’re not raising money, they reason. So why spend our energy writing a plan? This way of thinking isn’t necessarily wrong, but it’s not for everybody.

I run an organization that helps entrepreneurs launch their businesses, and I’ve seen a lot of people who decide to forgo business planning get into serious trouble. I met one woman who wanted to build a website and an e-mail newsletter about religion. She and her friends loved the idea. She poured tens of thousands of dollars into building a fancy website, but after working on it full time for a year, she got frustrated by her lack of progress and approached me for advice. I asked a few basic questions: Is your primary revenue source ads in newsletters or on the website? What does it cost you to acquire a subscriber? What brands want to advertise, how much will they pay, and how much traffic do you need to get them interested? How many subscribers do you need to break-even? All I got were blank stares. We eventually got her on the right track, but her oversights cost her a lot of time, money, and aggravation.

Then there are those business owners who spend months writing their plan. I had one client—let’s call him Lenny—who had a 40-page business plan complete with text, charts, footnotes, and numerous appendices, not unlike a college term paper. When we met the first time, Lenny walked in with a swagger, and dropped a spiral-bound tome on my conference table. When I tried to ask him a few questions, he simply said, “It’s all in there.” I explained to him that I didn’t have time to read it and asked him to explain his business. Lenny tried, but had trouble keeping it clear and quick, and left out many important topics. He had spent four months writing a document that nobody wanted to read and that didn’t help him articulate his ideas.

So, what is a business plan, if neither of those two things? It’s the process of planning a business. It’s about thinking through a business idea and sharing those thoughts clearly.

When thinking through your idea, try your best to be objective. Quiet the voices in your head that say, I just know it will work. And don’t rely on just your research and analysis. Get out and talk to potential customers. Reach out to people who understand your type of business. Share your thoughts, and ask for advice and introductions.

Once you’ve analyzed and vetted your ideas, and you’re confident that you’re on the right track, shift into pitch mode. Prepare to share your ideas in a persuasive, clear, and compelling way in order to attract partners, employees, advisory board members—and investors if you need them.

The best way to share your ideas is through conversations. If you’re great at making presentations, you could conduct those conversations with spoken words and a few visuals, like a product demonstration and a few drawings on a white board. But most people find it easier to keep business planning conversations on-track with the aid of a short PowerPoint presentation. Of course, this is business, and there are numbers involved. Unless you can count cards like Rain Man, you’ll probably want to run the numbers using an Excel spreadsheet, and paste a few high-level charts into your PowerPoint deck. Finally, you’ve got to land meetings to have the conversations, so you’ll want to have a one-minute elevator pitch and a one-page summary.

So when planning a business, save time and trees by ditching the 40-page term paper. Spend just a few weeks thinking through your ideas and creating a short, compelling pitch. Then buy yourself a beverage as a reward for being smart, and use the napkin as a coaster instead.

This article originally appeared on Inc.com.

Each year, I help fellow entrepreneurs and investors judge the MBA business plan competition at Harvard Business School. This year, I noted which pitch approaches seemed to work best and which tactics fell flat.

Here are five things that worked in this year’s presentations—and that you should consider including in your next business plan pitch:

1. Bookends
The best pitches started and ended with the same 30-second, crystal clear explanation of what was to come: The customers, their needs, the solution, and the amount of capital sought.  That helped the judges process and remember everything in between.

2. Comparables
At some point in most pitches, judges think to themselves, “Will this really work?” The best way to convince them is to show that you’re already getting results. If you are just starting out, another powerful approach is to cite real world comparables. For example, if your exit strategy is to sell your company to P&G, tell us how they recently bought companies similar to the one you are planning, for how much, and why.

3. Emotion
Every student used logic. But the winners built on that logic with an appeal to emotions. Winners brought their arguments to life, using examples, stories, or short demonstrations. Judges could sense their passion, and imagine how their customers would feel.

4. Market Research
The best competitors really understood their markets and taught us about them. They explained what parts of their industries were growing and why. That gave the judges insights and perspective, which helped us evaluate their pitches. Not to mention, it also gave us confidence in the teams.

5. Proof of Demand
Last but not least, the best teams had clearly been out in the field, talking with and listening to customers. They shared customer comments, survey results, and data collected from interviews and test market campaigns. In short, they convinced the judges that customers wanted their products.

There were also five business plan pitch tactics that the losing teams had in common—and that you should avoid:

1. Text Overload
Great slides make complex ideas simple and abstract ideas tangible, using numbers, diagrams, or pictures. But for the most part, words in pitches are best when spoken, not written. So stick to writing the headlines and telling us the details.

2. Too Much Focus on Product
We’re judging your business, not just your product. So don’t focus simply on what you’re selling. You should also keep in mind that you’ll probably wind up changing certain aspects of your product once you put it in front of customers and see what they think.  So if your pitch is 15 minutes long, don’t spend more than two of those minutes on your products.

3. Passive Research
It’s good to use some statistics in your presenation (e.g. “The market is growing at 10 percent.”), but reserve the details and sources for backup slides. Don’t base your entire business plan on quantitative research. Be sure to show that you’ve gotten out of the library and have gathered some qualitative research by talking to potential customers. “We interviewed 50 customers and they said…” carries much more weight than “A study showed…”

4. Overlooked Execution
A start-up idea by itself is pretty much worthless; it’s all about the execution. The weakest teams underestimated how much time and money it would take to develop and tweak a product, or they outright failed to think through how they’d attract customers in a cost-effective, repeatable way. So be sure to spend time really thinking about and researching how to properly execute your idea.

5. Lack of Authenticity
Stick to what you know and care about. One team pitched an idea related to parenting, but didn’t include even one story or picture of a child anywhere in their pitch. As a result, it felt like the team wasn’t truly passionate about parenting—even though that probably was not the case.

Ironically, some of the best business ideas in this year’s competition rated poorly with the judges because they simply weren’t pitched well. It’s important to understand that pitch tactics can make a huge difference in how well your business plan is received. So be sure to take your good idea, and turn it into a great pitch.

To learn more about how to create a business plan pitch, take UpStart’s on-demand course.

Q. As a busy, cash-strapped founder, how can you learn to tackle critical startup challenges like how to write and use a business plan?

A. On-demand courses. Self-paced, online and a la carte, so you can learn just what you need, when you need it.

We’re excited to introduce How to Write A Business Plan – the first in a series of on-demand courses. This course builds on our experience helping over 100 founders develop business plans, and follows an approach praised by the likes of TechStars, Harvard Business School and Kleiner Perkins Caulfield & Byers.

How to Write A Business Plan includes step-by-step instructions on how to create and deliver each slide in your business plan pitch, along with a workbook to fill-out as you go, and sample business plans to follow. You can even get private coaching if you get stuck, want feedback, or need to practice your pitch.

And from now through March 31, we’ll reward you for giving us feedback. The course is $125, but we’ll give you $50 back for filling out a short online survey and talking to us for 10 minutes on the phone. Just email feedback@upstartbootcamp.com when you buy the course to let us know you’d like to provide feedback and get $50 back.

Take How to Write A Business Plan today, or forward this to your favorite entrepreneur in the making.

I run into a lot of people with entrepreneurial dreams. When they tell me about their ideas, many use this punch line: “And nobody’s doing it!” Is that really true? Is it even a good thing? When you march into a meeting with an investor, think twice about declaring that you’ve got no competitors. Here’s why:

Perception is reality. You’re building a zebra with a unique pattern of stripes. But to potential customers and investors, your zebra looks a heck of a lot like other zebras. If you want their attention and their money, pay close attention to their perspective.

Better safe than sorry. Investors expect you to do your homework. Don’t let them down. Research and analyze the competitive landscape, so you can educate them during your pitch. Nothing undermines your credibility like having a potential investor school you on a competitor you didn’t know about.

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If you are assessing the viability of your business idea, or writing a business plan, you’ll need to conduct research. Do most of that research by talking to customers and experts, not by surfing the web or reading third party reports.

You are biased, after all. You want your idea to be viable. So if you get to choose which facts to consider, you’ll pick the ones that support your story. Instead, engage in conversations. That way you can listen, probe, and pick up on critical nuances. You may also hear some bad news. But better to hear it now, than once you’ve committed your time, money and reputation to building a company around a false premise. Here are two examples:

Researching your market environment. Yes, you can cite third party studies on how big your market is, and how fast it’s growing. And yes, third party research reports can be useful. But don’t fork over $3,000 for the full report – find the answer in the free press release. And speak directly with industry insiders, so you get insights into how big picture trends relate to your specific opportunity.

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So, you’ve got an idea for a better mousetrap. Awesome. And now you are trying to plan the business. Maybe to think through all the angles. Maybe to get advice so you can be sure you’re on the right track. Maybe to raise capital. Or maybe all of the above.

Regardless of your goals, don’t forget that “business plan” starts with the word “business” for a reason. A product is great. It’s important. But a product is not a business – and could very well be worthless on it’s own. Who will buy it? What exactly will they pay for, and how will you charge them? How many do you need to sell in order to cover your overhead? When do you expect that to happen? These are just a few of the issues to explore before you know if you’ve got a business, or just a product.

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