They’re fairly conservative documents. Whereas innovative technologists and entrepreneurs would wisely put plenty of creativity into their pitch decks and live presentations, the structure of business plans tends to be very consistent.
That’s because it makes it easier for a potential funder or business partner to find the information they need – and to make a reasonably quick decision about whether they want to read on.
So, when I was asked to speak to start-ups as part of a recent series of seminars produced by the Design Museum and Creative Entrepreneurs, I thought I’d ask 40 sophisticated investors, advisers and entrepreneurs who I know what they most like to see in business plans…and, um, what often goes wrong…
This impromptu (and rather informal) survey included VCs, social investors, technologists, business angels, private equity firms, accelerators, government agencies and lenders – as well as a few start-ups who’ve already raised funding.
Here’s what they told me they prioritise:
Why am I going to read this?
No surprise that the Executive Summary is so important in a business plan – with the emphasis very much on simplicity, clarity and specificity, including the points of difference about the business.
I look to get a sense quickly of not just what you do, but why it’s of value.
Is there really a market? Where’s the proof of concept?
How’s your business solving a real problem – and addressing a need to fix it? In what ways is your answer better than others? How big is the potential market for what you have to offer? Is it changing? Who’s going to do the selling – and how?
What’s the challenge – and what’s the start-up’s solution? And what makes them different from their competitors?
Who are you?
What’s your experience and expertise? Who’s in your team? What shortfalls do you have in management and expertise? Who else is already on board – including technologists, business partners, mentors, investors, and – yes – potential customers?
If we don’t believe in the team, then we don’t back it, no matter how good the solution looks or how attractive the market seems to be.
Who’s paying – and how much?
What’s your revenue model? What are your headline numbers? How will you generate and increase income? What assumptions are behind your growth forecasts? Is there a potential profit at the bottom line?
I like to get a strong sense of the rationale behind the revenue projections.
Look around for information
There are plenty of reputable sources of information about starting a company – and lots of very good free advice, such as the Knowledge Transfer Network, so it’s worth bearing in mind that you’re very likely to change and refocus your business plan significantly as you develop your best ideas.
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