A startup business drafts a business plan primarily because of these three In addition to outlining their vision for the business, going over key challenges, and pitching their business idea to investors, executive teams must also prepare a business plan. In spite of that, how would you feel if I told you business plans for startups are usually a waste of time? My extensive experience working with startups, entrepreneurs, and venture capital firms has led me to conclude that business plans for startups are largely pointless for several
You have to put a lot of work into them. Even if you use business planning software, it takes a lot of time to create a comprehensive business plan. It takes them only a short time to become outdated. In the midst of operational and marketing concerns, your business plan becomes obsolete very quickly. No one has the time to examine it. The usual investor or venture capitalist does not have the time or interest to pore over a long document like this. It takes them a very short time to take in hundreds if not thousands of startup opportunities, so you need to grab their attention right from the start. I suggest that instead of wasting your valuable time on a business plan, you should do the following five things when launching your business
1. Prepare a Great Investor Pitch Deck for Prospective Investors
The new norm is to present your company to prospective investors using a visual presentation called a “pitch deck” instead of a business plan. Investors are typically shown the pitch deck, which is composed of 15-20 PowerPoint slides and showcases the company’s products, technology, and team. A successful funding campaign requires a lot of time and patience from investors. In order to attract funding, a startup must ensure its investor pitch deck is top-notch and it clearly tells a compelling and interesting story during the limited time it has to do so. As an investor pitch deck, you should include the following topics in roughly the order set forth here and with titles that look like this
What is the background of the relevant person?) The Problem (what is the big problem you are trying to solve?) The Solution (what is the solution you propose? Is it better than the competition? The Market Opportunity (how big is the addressable market?) The Product (explain in detail the product) The Customers (who are your target customers?) What will be the reason for such a huge demand from the customers?) The Technology (what does the underlying technology do? How is it different from the competition?) The market (who are the key competitors?) Thrust (early adopters, partnerships) Business Model (what is the business model?) The marketing plan (how are you going to market it? Estimate the customer acquisition costs based on what you’ve learned so far. Customer lifetime value?) Financials (actual and projected profit & loss and cash flow) The Ask (what is the amount of capital you are seeking to raise?) Too many startups make To keep in mind, here is a checklist of preliminary dos and don’ts
Pitch Deck Do’s
The following should be included in the pitch deck cover page at the bottom left The information in this document is confidential and proprietary. [Name of company] has the right of copyright.
Do not give the impression that all rights are reserved.” Make sure that the viewer understands Consider including images and graphics that are visually appealing. To prepare for a meeting, send a PDF copy of the pitch deck to prospective investors. If you make the investor download your memo from Google Docs, Dropbox, or some other online service, you will just put up a barrier for them to actually view your memo. As part of your in-person presentation, do plan to show a demo of the product. A compelling, memorable, and interesting story that reflects your passion for the business is essential. Show you have more than just an idea and that you have gotten traction in developing a product, getting customers, or acquiring partners as soon as possible. You should have a sound bite you can use to captivate investors. Be sure that the font size, color, and header title style are consistent
Pitch Deck Don’ts
The pitch deck should not be more than 15-20 slides long (investors tend to have short A wordy slide should not be too many. Ensure your financial details are not overly detailed, as a follow-up can provide those in more detail. Your pitch deck should not attempt to cover everything. If you present in person, you will have the opportunity to add and highlight key points. Be sure to avoid using complex words or jargon, unnecessarily lowering or demeaning the competition. Try to avoid using jargon or acronyms that you may not understand instantly. You don’t want your pitch deck to look old. It is not a good idea to place a date on the cover page when it is several months old (that is why I don’t put a date at all on the cover page). You don’t want to include information or metrics about your business that are dated or out-of-date in your deck. Do not use poor graphics, a poor layout, or a “look and feel” that will muddle your presentation. Consider hiring a graphic designer to make your pitch deck look more professional.
2. Focus on Building a Good Prototype Product
Your product should have a version 1 that you can pitch to investors. A prototype will help you sell your vision more easily. As an added benefit, it gives you some momentum and traction and allows you to There will be some flaws in version 1, but nobody can expect it to be as good as version 2 or version 3. A product needs to be at least good, if not great, if you are just starting out. To be successful, your product or service will need to be differentiated from those of your competitors in a meaningful way. It follows that this principle is at the core of everything else. It is important to get a product out to customers as soon as possible since the first customer feedback is one of the best ways to help improve your product. Though you have to create a “minimum viable product” (MVP), it should still perform well and be different It is beneficial for many startups to have a “beta” test product as it allows them to work out bugs through user feedback. It’s better to achieve your goals than to achieve perfection, as Sheryl Sandberg, COO of Facebook, has said.
3. Thoroughly Research the Market Opportunity and Your Competition
Keep up with any new developments or announcements from your competitors, and do thorough market research on the product or service opportunity and competitive products. To do this, you can set up a Google alert that alerts you to any new information about those companies that surface online. Potential investors will ask to know more about the market opportunities and the competition in your industry. It will be difficult for any entrepreneur who claims that they do not have competitors to maintain their credibility. In order to anticipate these investor questions, here are a few ideas Are there any limits to how large the market is? Does the company have a realistic chance of capturing any of it? Do you know anyone who is a key competitor of the company? Who are their competitors? What has been their traction? Who or what gives your company an edge over the competition? In comparison to these competing companies, how do you measure your performance, features, and price against them? In your market, what are the barriers to entry?
4. Prepare Detailed Financial Projections
In order to properly plan the financial future of the business, it is important to prepare detailed projections. These reasons include Income statement Cash flow statement Details about income and expenses Balance sheet Underlying assumptions Of course, you will not be able to match exact financial projections with your actual results, but you can refine them as you move through In order to determine whether the business will be profitable at the end of the day. The aim of this is to determine how much startup capital will be needed before you get cash flow profitable. Organize your key assumptions in a table, such as the amount you’re willing to spend on each product, the cost of developing the product, marketing payments, employee expenses, rent and overhead, and gross margins, so that you and others can verify if they are reasonable.
5. Make Sure You Have Thought Through the Reasons Why Startups Don’t Get Funded By Investors
Entrepreneurs and startups are turned down for a number of reasons. Please make sure you understand these reasons and do not fall into them if they do In your executive summary or pitch deck you don’t provide the level of detail investors will want to see. You have not thought through the questions investors are likely to