Ever since Eric Ries shook up the entrepreneurial world with his lean startup concept, the traditional business plan that was expected to cover everything from marketing to financial information to hypothetical ways you could deal with potential problems seems to have flown out the window. We’re hearing more and more that you don’t really need a business plan; what you need is a pitch.
Let’s take a minute to think about that one. What does a pitch actually look like? Probably, it’s you (and your team) up in front of some pretty intimidating, important people who could make or break your business.
The key for how to write the perfect pitch is that you need the investors’ confidence, you need their support and, most of all, you need their money.
So yeah, you have to wow them. You have to show them that your product is exactly what the world needs right now and no one else could possibly produce it as well as you could.
But what else do you need? Realistically, you need all of the same elements that would have been included in that 30 to 50 page business plan. Your investors are going to want to know what your expenses are, your timeline, what your market is, your profit forecast and what they’re going to get for their money.
Picture this: you’re in your first round of fundraising, up in front of a major VC, and you think you’ve got him sold. His questions have become more to the point and he seems to really be paying attention.
Then, suddenly, he asks you about your expenses. You’ve sort of sketched it out, but you’ve been more focused on showcasing your product that on the nitty-gritty specifics. You stumble in your response and suddenly that glimmer of interest in his eyes gets a little dimmer.
Sounds like a little bit of a nightmare, doesn’t it? In fact, I wouldn’t be surprised if you’ve had stress dreams that include a situation something like this. The nice thing is, this situation is totally avoidable.
Be prepared. Do your research. Make sure that when you go into that room, you’ve thought about every single possible question. Part of having a good pitch is knowing what you’re talking about and knowing what you’re talking about requires doing all of the work that you would have to do for a traditional business plan.
In reality, then, the only real difference between having a good pitch and having a good business plan is the length. Writing up the 30-50 page report is a waste of your time—time that could be spent improving your product—but just because your investor isn’t going to read that information doesn’t mean you don’t have to know it.
