Stop Writing That Business Plan!
I've blogged a few times on the topic of Business Plans (See Related posts below), but as a result of many conversations I've had this year already, I'm feeling the need to write again on the subject.
When I capitalize the phase Business Plan, I’m referring to the traditional 30 pager most people understand to be a business plan. When I don’t capitalize it I’m referring to the planning of business to move the company forward; which should be the goal of every business plan or Business Plan.
The bottom line is if you're starting a new business venture and you ARE looking to raise money from friends, family, angels, etc., don’t think in terms of writing a Business Plan; think in terms of presenting a plan to create a successful business:
- Telling your story (the idea; the evidence you have to believe it will sel; competition)
- Why it is a good business idea (customer; market opportunity / size; how it will achieve a sustainable viable business)
- How you will get people to buy it (marketing / promotion; sales)
- How much it will cost to get to market (software development; marketing, employees, etc.)
Then, understand that these are your initial thoughts, i.e., hypothesis, and so they are likely to change as you learn! The best business plan template is the One Page Business Hypothesis. It's a free on-line collaborative tool that captures the information needed at this stage of the business development.
The fact is the educated investor has a mental checklist similar to the list above, therefore, if you provide her with the answers she’s looking for she will be interested in investing. The uneducated investor has the same checklist, they just don’t realize it and thus call it a gut feeling when they do or do not invest.
Typically it isn’t the fact you’ve written a Business Plan that gets an investor to invest, it’s the fact you’ve thought about what’s needed and conveyed it well enough for the investor to check off their check list.
If you’re not looking to raise money, SURPRISE! , it’s the same thing, i.e., you have to have the same answers as an investor is looking for. Therefore I recommend even if you’re not looking to raise money, pretend you are and go thrrough the same preparation. In some respects the startup looking to raise money and conducting investor presentations has an advantage over startups not doing investor presentations because they’re not getting the invaluable questioning from investors. That is to say, if a presentation causes the investor to ask a lot of questions, there’s a good chance you have a lot of gaps in your business plan, and if the entrepreneur is smart, they’ll make note of the questions and fix their business plan / presentation!
Thus, stop writing that 30 page Business Plan, and write something that follows the simple 4 bullets above and present it in an understandable way. Slide (PowerPoint) decks are a common approach (see Related posts below), but I prefer KENOVA’s One Page Business Hypothesis, as this provides an extremely powerful structure to convey the business and demonstrate that you’ve really thought about it. The thing that is nice about KENOVA’s OPBH is that it’s geared toward raising funds and building a team.
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