In my last post I wrote that the need to create a business plan has not changed, but that the package or form or elements of a business plan have changed.
For the student entrepreneurs that I coach, I don’t encourage a formal 15-page business plan with attached financials, resumes and so forth. Instead, I ask that they think through how to FEED their venture.
F – Financials
E – Elevator Pitch
E – Executive Summary
D – Deck
Thinking through financials, even knowing that they will be wrong and out of date nearly immediately, forces the entrepreneur to think through how the venture plans to make money, and what it will cost to produce revenue and profit in that way. The trick is to incessantly ask yourself “why?” and “how?” whenever you feel the urge to write a number that is not substantiated. Once you can stand up to a grilling about the assumptions behind your numbers, you are done (with the first iteration, that is).
If it hasn’t happened already, soon someone will ask you, “So, what does this new venture of yours do?” You’ll need the elevator pitch, a concise, upbeat, memorable, layman’s explanation, sooner than you think.
I said that I didn’t think a 15-page business plan with another 15 pages of attachments was needed. I didn’t say that you could skip writing – or thinking through – your story. An executive summary is your story, packaged in a 2-page form that is readable. A deck is the story packaged for presentation. Write them for yourself, not for investors. The value is not as much in the end documents as it is in the journey – in what you learn as you explain your venture to yourself.
Creating all of these documents may seem like a huge waste of time unless you plan to pitch investors. I disagree. You want the same thing that investors want – as much proof as possible that your venture has a good chance to succeed.
So, give your venture a better chance – FEED it.