It has been said (probably far too often) that crafting a business plan is just as much of an art as it is a science. There are MANY posts and books and ideas about what should be included in a business plan and it is not the intent of this posting to reiterate all of the information found in a successful business plan outline. This post will discuss the more artistic side of crafting a business plan.
One of the first, and arguably most important aspect of a business pitch is to get the investor’s attention and interest. If I don’t care about your idea I am certainly not going to write you a check, meet you for lunch, or read a lengthy business plan…it is just not going to happen. Entrepreneurs must understand that wooing potential investors is a process, not a document.
Consider the analogy of a fisherman. The fisherman is in his rowboat with an idea of catching fish. He first casts a small amount of “chum” (raw, chopped bait) into the water immediately around his boat. The smell of the raw bait attracts the attention of all of the fish in the lake and they swim near to take advantage of the free meal. Next, he expertly baits his hook and casts a ways away from his boat. The fish who have been interested in the free chum notice the attractive bait and nibble at the hook. The experienced fisherman then “sets the hook” by tugging expertly on the rod to drive the hook deep into the mouth of the nibbling fish. Next, the fish must be brought near the boat by “reeling ’em in” with the fishermen keeping a consistent tension on the line. Once the fish is near the boat a net can be used to land the catch and bring the fish into the boat.
Notice all of the tools that the fisherman used in this analogy…chum, bait, hook, rod, reel, boat, net, patience, experience, and skill. The fisherman did not just drive his boat around the lake at high speed dragging the net alongside the boat hoping to “catch a fish.” I have seen many entrepreneurs attempt a similar, unsuccessful strategy when looking for investors. Armed only with a massive business plan, trolling the funding event hoping to land the big one.
The business plan is only one tool used in landing an investor. The savvy entrepreneur will also use a very brief tagline, a 30-second elevator pitch, a 1-2 page executive summary, a 12-slide introduction, etc. throughout the process. The goal at each stage of the process is NOT to “land the fish” but to bring an investor one step closer to the boat.
Just as you don’t fish with a rocket-propelled grenade launcher, you don’t begin introductions to potential investors with a complete business plan. Consider the following steps and consider that there is a fine line between baiting the hook and feeding the fish.
- Tag line
- Mission Statement
- Elevator Pitch
- Initial Presentation
- Executive Summary
- Business Plan
- Detailed Presentation
- Due Diligence I
- Due Diligence II
- Term Sheet
The next post will include additional information about how to get investors to move from one stage to the next.
Young Entrepreneurs of America 