The business plan admits the entrepreneur to the investment process. Without a plan furnished in advance, many investor groups won’t even grant an interview. And the plan must be outstanding if it is to win investment funds.
Too many entrepreneurs, though, continue to believe that if they build a better mousetrap, the world will beat a path to their door. A good mousetrap is important, but it’s only part of meeting the challenge. Also important is satisfying the needs of marketers and investors. Marketers want to see evidence of customer interest and a viable market. Investors want to know when they can cash out and how good the financial projections are. Drawing on their own experiences and those of the Massachusetts Institute of Technology Enterprise Forum, the authors show entrepreneurs how to write convincing and winning business plans.
A comprehensive, carefully thought-out business plan is essential to the success of entrepreneurs and corporate managers. Whether you are starting up a new business, seeking additional capital for existing product lines, or proposing a new activity in a corporate division, you will never face a more challenging writing assignment than the preparation of a business plan.
Only a well-conceived and well-packaged plan can win the necessary investment and support for your idea. It must describe the company or proposed project accurately and attractively. Even though its subject is a moving target, the plan must detail the company’s or the project’s present status, current needs, and expected future. You must present and justify ongoing and changing resource requirements, marketing decisions, financial projections, production demands, and personnel needs in logical and convincing fashion.
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Because they struggle so hard to assemble, organize, describe, and document so much, it is not surprising that managers sometimes overlook the fundamentals. We have found that the most important one is the accurate reflection of the viewpoints of three constituencies.
1. The market, including both existing and prospective clients, customers, and users of the planned product or service.
2. The investors, whether of financial or other resources.
3. The producer, whether the entrepreneur or the inventor.
When Brian, Joe and Nate founded Airbnb, they had an air mattress, entrepreneurial passion, and a vision for reinventing travel and hospitality, but no clear idea how to approach VCs or how to craft a pitch deck.
They came across Sequoia’s guide for how to write a business plan and the rest is history. They made a great deck.
But it wasn’t really the slides we liked—it was their ideas, the clarity of their thinking, and the scope of their ambition. We love partnering with founders hell-bent on bringing an idea to life that conventional wisdom deems impossible. And we love to partner early— when an idea is newly formed and has the maximal room to grow.
You can find our guide to pitching below (with a few refinements from years of use).
Company purpose Start here: define your company in a single declarative sentence. This is harder than it looks. It’s easy to get caught up listing features instead of communicating your mission.
Problem Describe the pain of your customer. How is this addressed today and what are the shortcomings to current solutions.
Solution Explain your eureka moment. Why is your value prop unique and compelling? Why will it endure? And where does it go from here?
Why now? The best companies almost always have a clear why now? Nature hates a vacuum—so why hasn’t your solution been built before now?
Market potential Identify your customer and your market. Some of the best companies invent their own markets.
Competition / alternatives Who are your direct and indirect competitors. Show that you have a plan to win.
Business model How do you intend to thrive?
Team Tell the story of your founders and key team members.
Financials If you have any, please include.
Vision If all goes well, what will you have built in five years?