Writing recently in the Wall Street Journal, Paul Lee says that a good business plan is simpler than you think. The business plan shouldn’t be too detailed but rather focus on actual working products or services. Here is what Lee writes:
“I review somewhere between 50 and 100 qualified opportunities a month. Some of them come with 40 page business plans that include 5-year projections and all sorts of detailed industry research. Although it’s never bad to be thorough, these types of business plans have become much less of a crucial point for potential investors.
The best pitches come with a 10-12 slide PowerPoint that succinctly explains the business, with a link to the working service or website and the entrepreneurs biography/past experience. That’s it.
Does that mean that you shouldn’t write a business plan? Not exactly. I would advocate writing a business plan, but primarily for yourself or your co-founders. There’s value in using the plan to outline the assumptions going into the business and as a roadmap of where you’re headed. This plan should guide your actions and strategies to give you some sense as to whether you need to make changes or stay the course, but it no longer serves as your main fundraising tool. . .
The bottom line is that startup founders should adjust their VC pitching strategy to today’s environment. Take advantage of the fact that technology costs have been drastically lowered and businesses can be launched with a fraction of the capital that was needed in the past. A startup founder’s time is precious and should be spent on building the product/service instead of writing the perfect business plan. Focus on gaining traction for your business and use your business plan as an internal guiding force for getting there.”
Check your understanding:
- What’s the best way to present a business plan to potential investors?
- What three items should a business plan include?
- What two tasks should an entrepreneur focus on?
It’s best that you try to answer that question before I sneakily give you the answers, but alas, it is not meant to be. This article is simply saying that an effective business plan can be developed in three simple steps:
1. With a simple graphic presentation
2. Ten to 12 slides at most, a link to the website, and the bio-data plus experience of the founders
3. Build the product or service and create interest
My name is Craig Gonzales and I co-run Business English HQ with Frank Bonkowski. Please ask a question, comment or let us help you.