UpStart Bootcamp : Reality Check Questions

Step 1 of 6: Your motivations for starting the business

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Your Company's Name:

Goals
Establishing clear goals for your startup can help ensure that: 1) All members of your team are striving for the same things, 2) Founders and investors have a plan for getting returns on their investments, and that 3) Anyone giving you advice or feedback has the right perspective. To what extent have you identified specific goals for your new business?

I have a target for how big I'd like our company to be in five years.Example: In five years, I'd like to have annual revenue of $10 million, and a team of 15-20 employees.
I have a plan for how I'll provide financial returns to founders and/or investors.Example: If I hit our financial targets, this company will be an attractive acquisition target for a leading online retailer like Amazon.
I have specified non-financial motivations for starting the business.Example: I'd like to make money for our investors, and to establish credibility as a successful entrepreneur. I'd also like to be the market share leader within my niche.

Step 2 of 6: Why customers need what you’ll provide

Environment
Context often spells the difference between success and failure. Tablet computers and social networks were both around in the 1990s, but the world wasn’t ready for the iPad or for Facebook until many years later. To what extent have you explored whether the environment is right for your new business?

I have identified key trends in this industry, and they are in my favor.Example: The U.S. population is aging, and technology in our daily lives is proliferating. Older Americans have more devices and applications than ever before, and many are expected to work together.
I have estimated the size of this market, and it’s big enough to support my revenue goals.Example: 25 million Americans over the age of 50 place over 125 million calls to tech support each year. I can hit our revenue target with a market share of less than one percent.

Customers
By knowing who your customers are, and understanding their needs, you can do a better job of providing them with products or services they want. To what extent do you know how to recognize your target customers?

I understand what constitutes an ideal target customer.Example: My core customers are Americans over 50 who own at least seven tech devices, and place a call to tech support once a month.
I have spoken to dozens of target customers to understand who they are, and how they think about these types of products and services.Example: I met with over 50 customers in our target market. They are late adopters of technology. They are also accustomed to learning by reading instruction manuals and getting live help, and they are frustrated by today’s DIY tech support environment.

Unmet Needs
If you make sure the products you envision address an important need your customers have that’s not being satisfied, you can improve the chances that “when you build it, they will come.” To what extent do you have objective proof about the unmet needs of your target customers?

I have identified the unmet needs of my customers.Example: My customers want help with basic tech challenges, like how to upload photos, bank online, or SKYPE with their grandkids. They want that help to be live, phone-based, and provided by people who can communicate with them clearly.
I have objective proof of those unmet needs.Example: 72% of the customers I interviewed said they would pay $9.95 per month for the type of tech support we described.

Step 3 of 6: How you’ll satisfy customers & make money

Strategy
A clear statement of your company’s strategy can help you and your team stay focused and set priorities. That statement should provide a simple explanation of who your customers are, what you are offering them, how your products provide them with unique benefits, and how you will make money. To what extent have you made that explicit?

Can you replace the text in the following parentheses? For (your specific target customers), (your company name) is the (definition of your type of product or service) that provides (unique set of benefits).Example: For Americans over the age of 50, DigitHeads is the tech support service that provides immediate, phone-based help with any basic tech question or issue.
Do you know precisely how you’ll generate revenue?Example: I’ll charge customers a monthly subscription fee for basic support, with one-time charges for major projects.

Analogs
Most business ideas build on concepts that have already been attempted. By understanding companies that have done things similar to yours, you can copy what works – and avoid what doesn’t. To what extent have you found and researched analogs?

I have identified one or more companies that are similar to ours in terms of the customer needs they address, the way they reach customers and/or their revenue streams.Example: Consumer Cellular provides inexpensive, easy to use cell phones for older Americans. They generated revenue of $65 million in 2008. Their success suggests it's possible to build a business tailored to the tech needs of older Americans.
I have learned about what worked and what didn’t at those analogs, by speaking to their founders, investors, competitors, and/or former executives.Example: According to the founder of Consumer Cellular, they tried to reach customers through infomercials but found it too costly. They ultimately succeeded by striking a deal whereby AARP promoted Consumer Cellular in exchange for a revenue-share.

Offering
It’s easy to get excited about all the possible bells and whistles you could offer your customers. But if you start with just the most critical features (your “minimum viable product”), you can get a product in front of customers faster and cheaper, and see how they react. To what extent do you have a plan for your minimum viable product?

I have a simple way of describing or showing the features of my initial offering.Example: I'll provide tech support via a call center operated 18 hours per day, manned by generalist tech consultants who can answer basic questions on the spot, and set up appointments for more in-depth help.
I have a plan for how our product will evolve, but I’ll start with limited features – a minimum viable product.Example: Initially, I’ll provide support for the ten tech issues our customers cited as their biggest headaches.

Marketing
If you can attract customers in a cost-effective, repeatable way, you’ll be able to grow and generate profits. You’ll have to do some testing to find the best marketing approach, but you’ll need to have some hypotheses up front. To what extent have you identified the primary ways you expect to attract customers?

I have identified the one to three top ways I expect to attract customers. Example: I think our best marketing approach will be to develop revenue sharing partnerships with companies that already reach our target customers.
I have some early indications from outside our company that my marketing approaches are feasible.Example: I’ve had some promising, early discussions with AARP about striking a partnership. I’ve also found three other potential partners.

Business Model
The basic numbers behind how you’ll make money are the easiest to calculate, and the most important to understand.

I have a prediction for how much it will cost us to acquire an average customer, and how much profit can be generated during a relationship with that average customer.Example: I anticipate that it will cost us about $50 to acquire a new customer. I estimate that a typical customer will subscribe for 18 months at $9.95 per month, and buy one premium service for $125, generating lifetime revenue of $304, and margin of $225.
I have an estimate of the number of customers needed in order to break even.Example: Given our overhead estimates, I’d need about 15,000 subscribers to break-even.

Step 4 of 6: How you’ll put your plan in action

Team
The right team can help you get started with less capital, and execute with more speed and flexibility. To what extent have you thought about what constitutes the right team for your venture, and lined up the people you’ll need?

I have figured out which roles I’ll need to fill during the first six to 12 months, and profiled the skills and experiences needed for each role.Example: My core team needs to include three people: 1) An expert in consumer acquisition and marketing, 2) An expert in tech support operations, and 3) An expert in call center technology.
I have people lined up for each of those roles.Example: One of my partners is an expert in consumer acquisition and the other is an expert in tech support operations. We’ll need to hire or partner with a call center technology expert, and have lined up two potential candidates.

Risk
Startups are inherently risky, so you’ll want to do everything possible to understand what could go wrong, and how to maximize your chances of success. To what extent have you thought through the risks involved in your business, and what you can do about them?

I have identified what’s most likely to go wrong with this plan, and how I can best prevent it from happening.Example: One big risk is whether I’ll have the right number of tech support people, with the right skills, to the match needs of our customer base as it grows. To offset that risk, I will start by supporting a limited set of tech issues, and add to that over time.
I am familiar with my competitors, including the biggest potential threats, and I have ways of preventing them from impacting my business.Example: The closest competitor is Best Buy's Geek Squad, and they could create a service for older Americans. If I close an exclusive deal with AARP, I'll have a competitive advantage.

Progress
The single best way to prove to yourself and to others that your business will succeed is to show that it’s already working. To what extent can you demonstrate progress to date?

I have the complete founding team in place.
I have a product ready to put in front of customers.
I have customers using and paying for our products.

Implementation
An implementation plan helps you, your team, your advisors and investors agree on what you’ll do next, and how you’ll measure success. To what extent do you have an implementation plan for the next six to 12 months?

I have specific implementation steps outlined for the next six to 12 months.Example: Over the next six months, I’ll hire a technology expert, train call center reps, and secure a marketing deal. Over the following six months, I’ll test market promotions and tech support operations.
I have established goals for each step.Example: I’d like to attract at least 250 new customers per month within one year.

Step 5 of 6: Resources you need to execute

Projections
It’s very difficult to predict what will happen six months from now at a startup, let alone five years from now. Still, it’s helpful to develop a road map of how and when you expect money to flow in and out of your company.

I have a pro forma (estimated) Income Statement for at least three years.
I have a sense for how much money I’ll need, when I’ll need it, and how big I expect to grow.

Financing
The last step in business planning is to make sure you’ve got the resources you’ll need to get through the next six to 12 months. To what extent do you know what you need now, how you’ll get it, and where it will get you?

I know how much capital I need right now, and what milestones that will enable me to hit.Example: I’m looking to raise $500,000 now, which will get my company through the next 12 months, and reach the point where we’re generating over $20,000 in revenue per month.
I have a plan for how I’ll get the money I’ll need (which could be from savings, bootstrapping, loans, or investors).Example: I’m approaching two groups of local angel investors: 1) Those that focus on seed stage consumer services opportunities, and 2) Those that invest in products and services for older consumers.

Step 6 of 6: Your business plan documents

Materials
Whether or not you plan to raise capital, you should have a business plan. If you are raising capital, you’ll also need an executive summary and a set of financial projections. To what extent have you developed the materials you’ll need?

I have a business plan in the form of a 12 – 15 slide presentation (“deck”).
I am raising capital in the next 3 months.
I have a one-two page written executive summary.
I have a set of financial projections for the next three to five years.

Step 1 of 6: Your motivations for starting the business

Step 2 of 6: Why customers need what you’ll provide

Step 3 of 6: How you’ll satisfy customers & make money

Step 4 of 6: How you’ll put your plan in action

Step 5 of 6: Resources you need to execute

Step 6 of 6: Your business plan documents

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