The Key Elements Behind A Great Startup Business Plan.
Building a business? Going for investment? It might be time to consider building a business plan.
In this article, we'll outline some of our best hints and tips in building a great business plan for your business, quickly and efficiently, so you can get on with growing.
We’re going to buck a trend here.
We believe that there’s no right or wrong way of producing and formatting a business plan, despite what you might read on the internet. There are of course key elements you should include. But don’t believe that the ‘exec summary / market analysis / tactics / strategy’ approach is the only way. It’s old fashioned. Outdated. And really boring.
Instead, think about your audience first. Are you producing this for yourself? Your business and team? Or specifically for an investor, to raise investment?
We believe that this is one of the most important decisions you have to make. If you’re pitching for investment, investors have very short attention spans. If you hit them with a Microsoft Word template, you’ll lose them very quickly.
Even if you create a short presentation, you must consider your audience. Let’s say you’re developing a high-tech, cutting edge technical solution. If you’re selling the opportunity to a general Angel investment crowd, you’ll need to explain - in detail - the market you’re aiming at. The background to your solution and applications. But if you’re building this business plan and pitch for a technical, industry specific audience, you’ll run the risk of losing an audience who already ‘get’ what you’re talking about. Know your audience, and you’ll make sure your message hits the spot.
With more and more competition for investment, lean plans are incredibly important. We know that it might seem counter-intuitive, but less really is more - keeping it punchy and pithy will help you to keep an investor’s attention. Even if you’re not going for investment, it will make sure your team come back to the document to read and update it.
We prefer slides to word documents too, even if you’re going for an A-round, because it forces you to keep things short. Often we produce two versions: one that’s short for presentations and another to send ahead for reading independently. It’s a nice way to work, as it give you the opportunity to work out the broad messages before working through the detail.
In Art of the Start (if you don’t own a copy, buy one immediately) - and on his website, Guy Kawasaki outlines ‘the only ten slides you need in your pitch’. It’s a bit controversial. We don’t entirely agree (be flexible, and true to your business and investors) - but it’s an excellent start to a structure.
We’ll use it as a basis to run through some of the key elements you should include in your business plan.
- A summary and introduction. Omit this from a pitch, but include if you’re sending to an investor to read. Our advice: make it personal. Address them like you would in a letter or a conversation. Explain your business: your passion for it. The opportunity that it presents to them. It’s your first chance to win them over, and we promise it’ll go a long way too.
- Problem / opportunity. I’m sure you’ve heard this one before. Explain the pain you’re solving or the pleasure you’re providing. What’s also incredibly important here is for WHO. Being as specific as possible here will help you grow your business and help investors to understand the opportunity.
- Value proposition. The value that your product or service provides your customer by addressing that problem or opportunity. Even in a business plan, we advise our clients to keep it short. Don’t include features, discuss benefits.
- Underlying magic. What makes your solution unique, better, and difficult to beat.
- Strategy. Here, you should include an overview of your market focus. An analysis of that market - the trends and competitive products. Your product or service differentiators. Ultimately, you’re trying to show why your business will win - even as a little fish in a big pond.
- Tactics. Your business model. Go to market plan. How you’re going to make it happen, when and with who (don’t forget your team - it’s one of the most important parts of the pitch).
- Goals. Your high level aspirations. Your key KPIs and what you’ll measure. Your financial projections. Your exit strategy or plans for the long-term.
THE SECRET TO SECURING INVESTMENT AND A GREAT VALUATION.
If you're working on a round of investment, it's often difficult to know what to focus on.
Here's the secret. There's little more important to an investor than a great business model, and a strong financials behind it. It's the key to raising capital. And getting the valuation that you and your business deserve.
We're offering a free course to get you started. Developed in conjunction with the Design Council - we'll outline our approach to building a great investment case, and exercises to building your own. What are you waiting for?
Business plans needn’t be complicated, long and boring documents. We believe they should be inspiring. Fast to read. Easy to understand. They’re not only valuable for investors. You should keep them to hand. Use them in your day-to-day work. They’ll help you to keep on track. Understand the direction of your business. It’s purpose and goals. The strategy to get there. As it changes, update it. Keep it as a ‘living’ document to get best value from it.
Finally, keep it short. Build it quick. Test and develop the assumptions (if you’re a startup, they’ll change before you know it anyway). Use it to develop simple, practical strategy and a framework to execute it. Growth and traction are the most important thing.
If you’re building a business plan, and you’d like another perspective, get in touch. I’d love to hear your plans.
Jared is a partner at Think Plan Thrive, a London based Strategy company. We help organisations seize opportunity. Execute and grow, fast. We’re specialists in commercial and marketing strategy, pitch and investment cases.