it was their thoughts, the lucidity of their reasoning, and the extent of their desire. We cherish banding together with originators never going to budge on breathing life into a thought that tried and true way of thinking esteems unthinkable. What’s more, we want to accomplice early—when a thought is recently shaped and has the maximal space to develop. You can discover our manual for pitching beneath (with a couple of refinements from years of utilization).
- The Business Plan is a Critical Tool for Funding
A crisp and solid startup business plan that holds together under a reasonable amount of scrutiny is one of the best weapons that an entrepreneur has in his or her quiver of arrows to slay investors and gain funding for their startup. Assuming that you have a good business idea and a business plan, along with the associated financial model, a solid pitch deck, a crisp & clear elevator pitch, confidence of the entrepreneur, and a reasonable amount of humility, you have the essential components for getting your startup funded.
- What to Include in a Business Plan
If you look online, there are a variety of different sources. I’ve picked three outlines of what should be included in your business plan. The US Small Business Administration, Entrepreneur magazine and Forbes magazine all have very similar outlines. All of them include an executive summary, a company description, market, customer & competitive analysis, management team, and a financial plan. This tells you a couple of things, but the biggest is that investors are used to getting specific information, and getting it in a very consistent way.
- Where Do Entrepreneurs Go Wrong?
There are many things that I’ve learned about business plans from being a CEO, a serial entrepreneur, an investor, and a purchaser of startup companies.
First, many companies THINK they have a plan, and what they really have is a loose set of ideas about a business proposition and their idea. They have not done the homework on the customer, the market, and the competition. An inability to predict the future with 100 percent accuracy should not be an excuse for not having a plan. Your plan likely will go through a set of refinements as your company progresses, and you gain valuable customer feedback, but lacking a plan is really like having a boat in the ocean without a rudder in the water. You will really have no ability to control your direction at all, since you don’t know where you’re going.
Second, entrepreneurs want to spend 90 percent of the time focused on their product, but investors want to spend maybe 20 percent of the time in the company’s product, and the other 80 percent on the business.
Third, most entrepreneurs don’t understand their audience. In dealing with the vast majority of investors, you are really dealing with what I call, “short attention span theater”. These guys and gals are extremely busy and bombarded with business plans all day long. In addition, they are conditioned to say NO! In order to gain their confidence, you need to have a business plan Executive Summary and an Elevator Pitch that stands out from the crowd. The way to stand out is to summarize well and tell a good story.
- The Purpose of the Executive Summary
An executive summary of a startup business plan is first and foremost a summary, so you write it last, even though it is the first thing in the startup business plan. Because it’s at the beginning of a business plan, I think many new entrepreneurs try to write it first, and it really doesn’t work. It is a summary! You need to have the in-depth understanding of a strategic business planning process, which we’ll talk about in a bit, to write a really good executive summary.
The executive summary is really designed to grab potential investor interest. It highlights the overall strengths of your business, explains where you’re at today and where you’re going. It shows why your business idea will be successful. If you’re developing a business that you plan to get funded by either angel investors or venture capitalists, you need to have a business model that has the potential to deliver a 10X return on investment.
- The BEST Executive Summaries Tell a Story
Your executive summary should tell a story, as should the full startup business plan. A story has a beginning, middle, and an end. The story should start with the problem that you are solving and why it is a big deal. Give the really big picture. You’re on a mission to solve that problem. You have a solution that solves this critical problem better than anyone else, and you can do it over a sustained period of time, even as competition enters the market. The market is big and growing fast, and people don’t realize it yet, but a discerning eye can see it emerging. Your solution has incredible value to your target customers, and your business makes money, and a lot of it. There are bigger competitors in your space that will struggle to develop what you have, and it will be critical to them for their businesses going forward.
- Key Components of a Rock Solid Executive Summary
Here are the key elements of the startup business plan executive summary. Be sure to include them, even with the story. Have a mission statement, which is really just a description of your idea in the context of the problem that you are solving. It tells what your business is all about, and is typically several sentences to a paragraph. Include information about your company, when your business was founded, the names and roles or the founders, the key employees, the number of employees and business locations. Include any growth highlights. If you’re pre-revenue and pre-product, there is still an opportunity to talk about growth in terms of the target market.
- Make the Summary Come Alive with an Elevator Pitch
The executive summary is your opportunity to give your best clear, concise “commercial” about the company. The full startup business plan is the infomercial. You also will need to learn to do this summary in a concise set of slides for use with investors, and in verbal form where you don’t have any slides. This last version is typically referred to as an “elevator pitch”. For those of you who aren’t familiar with this term, taking a ride up an elevator could last thirty seconds to two minutes. In that time you need to clearly describe what your company does, how you’re going to win in your target market, some of your specific customers and the competitive advantage of your products versus the alternatives in the business.
- Know Your Audience
If you’re talking to a purely financial investor, you tailor what you’re saying to that audience. They may have a different basis of knowledge that they’re operating from. The elevator pitch should be the basis for that, but you also have to keep your target audience in mind. Once you have this down, you need to learn it, memorize it and practice it.
- Be Prepared
Speak with authority and passion. No one will be interested in you or your company unless you’re excited about it. I’ve met a number of entrepreneurs and company CEOs throughout the years. They’re down in the mouth and really sad. They’re trying to raise money. I think, “Wow, I don’t know that anyone is going to give you a dollar with how you feel about how things are.” You need to be able to be passionate about what you’re doing.