Developing a full-blown business plan may sound intimidating to many budding entrepreneurs and aspiring business owners. But as it turns out, the business plan itself isn’t the work—the work should already be happening.
From early market research and customer discovery, to the actual product development and proof of concept, building a new business from the ground up requires significant passion and commitment. Business plans are primarily a communication vehicle to present the information, demonstrate the work you’ve done so far and, ultimately, to persuade potential investors, employees and partners to get on board with your mission. The process of developing a business plan is also a valuable tool to unify your team and maintain alignment around key objectives and results.
Many investors today are not requesting the traditional 15- to 20-page plan—at least not right away. More often, they are looking for a condensed version in the form of an 8- to 12-slide “pitch deck,” which more closely reflects the executive summary found in a full business plan. So, start there first!
When thinking about your pitch deck, be aware that investors are looking for some specific components. Begin by sharing your personal story and how the idea for your business came about, as well as the mission and vision for the company. Investors will want to know what drives you forward when the road gets bumpy. Next, introduce your team. If you have partners or employees, talk about their backgrounds and skillsets. Be honest and transparent about what gaps exist in those skillsets—don’t pretend to be something you’re not. Highlight how well you work together as a team.
Moving along, you’ll want to go a little deeper. Provide a summary of any intellectual property (IP) you may have, such as patents, copyrights, trademarks, etc. Then it’s time to talk strategy. Present an overview of your business model, customer strategy and distribution channels. Each channel likely has its own economics associated with it, so be prepared with data to back up your approach. For example, products sold directly to consumers online may require a higher customer acquisition cost—the marketing expenses needed to reach the target audience and convert them into paying customers. But they may also afford higher profit margins, compared to an in-store product that is sold to retailers at a wholesale price.
The pitch should also cover the use of proceeds. How much money are you seeking and what will it be used for? How and when will the investor(s) recoup their capital? Likewise, what metrics will you use to measure success? These metrics may be illustrated using a timeline that visually maps out your progression toward specific, time-bound milestones. Lastly, investors want to know your strategy to scale the business, as well as your exit strategy, if appropriate.
Here are some quick and easy tips for developing a strong pitch deck:
- Simplify the language. Avoid industry jargon and acronyms that are hard to follow. To overcome this common misstep, try practicing your pitch in front of people outside the business, such as friends and family, to see where you lose them in the presentation.
- Keep it high-level. Don’t pack in too much information, and leave plenty of time for questions. Similar to a job interview, that first impression is everything. Investors want enough time to develop a good understanding of whether or not to invest in you, and your product, before they sign a check.
- Make it visual. Complicated graphs and text-heavy slides will put your audience to sleep, so play around with highly visual infographics, videos and product samples to pique their interest and engage them throughout the presentation.
If you’re still in the early stages of building your business, it may be too soon for a full-blown business plan. But there are tools such as the business model canvas and value proposition canvas that can help you flesh out the details. These two, in particular, provide simple ways to distill complex ideas and get to the heart of your vision for the company.
At the other end of the spectrum, a later stage business plan dives much deeper into each of the components mentioned above. The plan also covers significant financial analysis including assumptions, sales forecasts, a breakeven analysis, a detailed set of pro-forma financial statements, an integrated ownership and capitalization table, and a detailed investor return summary by shareholder class.
At the end of the day, successfully pitching potential investors relies on strong communication skills. You may be a business powerhouse or a genius inventor—but your vision won’t become reality if you can’t persuade others to get on board with you. Every company has a story, so use your pitch deck and your business plan as strategic communication vehicles to share yours.
Marie Mayes serves as director of the Center for Entrepreneurial Studies and as a clinical assistant professor in the Carson College of Business at Washington State University (WSU). In her current role as a leader of WSU’s entrepreneurial efforts, Mayes promotes entrepreneurial engagement, scholarship and dialogue across the university. She oversees the WSU Business Plan Competition, mentors and coaches student entrepreneurs in all phases of business development, and encourages student engagement in entrepreneurial activities and clubs. Mayes holds a BA in Political Science and an MBA, both from Washington State University.