06 - Decentralized Decision Making: Why business plans need to be submitted before funding

DeepBlue

Active Member
Feb 2, 2018
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This post will outline why a business plan is essential for ensuring the DAO can make better quality decisions when considering projects to fund. Providing a fully worked out business plan is not only useful for the project managers to ensure they think through all aspects of their project, it is also important for those assessing the project to ensure it is worthwhile.

No venture capital firm or business angel would seriously consider any project without a fully worked out business plan. So, why should Dash give funds out without a business plan?

Reasons for a business plan being submitted with every funding request.

1. Harvard Business Review: Businesses are 16% more likely to be successful if they have a business plan.


Harvard business review undertook a detailed research project to find out if writing a business plan leads to greater success in a new project. They found that there was on average a 16% increase in success rate for those projects that had worked through a fully business plan. So, the immediate question is does the Dash DAO want to have a minimum of at least 16% return on success rate for the money it spends on funding new projects with the Dash Treasury?


The business plan covers all areas of running a project from budgeting, marketing, resources, SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis. These all need to be thought through in order for a project owner to identify areas they need to work on or plan for in order for the project to be successful.

Although projects can work without a fully worked out business plan the research by Harvard shows they are less likely to be successful compared to ones that do have a business plan.

Dash projects are much more likely to see a higher increased level of success than 16% found in the HBR. This is because people starting their own businesses will invariably be using their own capital to get the project going. Therefore they would have "skin in the game". With a Dash funded project they have little to no skin in the game.

2. Business plans save MNOs time getting the details on the project. If business plans were made compulsory with every funding request MNOs would immediately have more information without the need to ask the proposal owner. Instead MNOs can get a quick overview of the project by reading the business plan then we can ask more detailed questions on the plan.

Currently MNOs are voting simply if the proposals "seems like a good idea". This is NOT a sound way to make funding decisions, as has been proven time and time again. Currently very little questioning of investigation goes into determining if the project is actually viable or in fact if the project owners even have the expertise to be able to do what they say they can.

3. The quality of the Business plan is a clear measure of the seriousness of the proposal owner. Dash has been plagued by money-grabbers who come up with what seems a good idea and then deliver nothing in return. It is clear these proposal owners are not interested in delivering any value to the network - they just want to get our DASH treasury money. By insisting on a fully worked out business plan we can see if the proposal owner is really serious about their project. A business plan is a lot of work to do and by reading these plans we can have a much better idea if the proposal owner is really serious about their project or if they are just in it for a quick money grab. Most money-grabbers have been lazy or self centered. By insisting that a business plan needs to be submitted with every proposal it will put off many of these past money grabbers because they would have to spend a lot of time researching their project - this is something they would have great difficulty in doing if they were not actually intending to deliver anything to the network.

If a proposal owners is not prepared to take the time to think through all aspects of their proposal and document it in a business plan should we be taking a risk to back those types of projects?

4. Greater Accountability and Transparency by submitting a business plan projects become more transparent to the network as to the specific deliverables and details of the project. It makes sense that the network needs to know what will be delivered and when it will be delivered. A written out business plan will give this information and then forms a record of what the proposal owners agrees to adhere to. This is useful because the network then has a structured document to which we can refer back to and hold proposal owners accountable if they do not meet what they said they would in the business plan.

5. Marketing and Promotion of Dash through the business plans
Investors look for detail business plans in order to determine if a project is worth investing in see this article below on what VCs look for in a project for investment:


If every project requesting funding had a detailed business plan organizations looking to invest in DASH would refer to these business plans and they would feel much more confident about investing in DASH. Investment firms look for business plans before investing see the above reference that illustrates this.

For all of these reasons I believe a business plan is essential if Dash treasury wants to improve the quality of its decision making process. I would be interested to hear what other community members think about this suggestion. Should business plans be made mandatory? Or should we carry on as we are now giving out large amounts of money to projects that have nothing more than a good idea and a promise?
 
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JOL

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Feb 8, 2017
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the obstacles to go in that direction:
- Most MNOs do not know how to read and/or understand a business plan.
- Most MNOs do not know what it is like to invest and manage a budget.

More simply pay only when the work or service clearly and without any uncertainty delivered on time.

As is usually the case with the use of subcontractors
 

Hunterecca

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Jul 14, 2020
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Thank you for sharing this. Those tips are important for those who want to start their own business project. Unfortunately, not too many young entrepreneurs understand how important to make a detailed business plan. Besides, it is vital to do before they apply for a loan or other financial support. Too many start-ups fail at the beginning because the business plan wasn’t detailed enough. Most of the time their owners ignored some important aspects. Besides, too many people face the same mistake when they calculate how much taxes they are supposed to pay. I usually recommend people to consult on https://taxfyle.com/business-incorporation-services and to find out how much exactly they are supposed to pay.
 
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