Business plans are a critical component of securing financing. However, the traditional approach to them is becoming antiquated quickly. In an era that nimbleness is a requirement, not an option, the themes in a business plan are outdated as soon as the ink dries. As an investor, we're mostly interested in hearing, not reading, your pitch and reviewing your projections. So, instead of spending hours wordsmithing your competitive analysis or tweaking your resume, we challenge founders to spend more time thinking about the core of their business by answering the following questions. Start by reflecting on the questions on your own and then block some time with your cofounder, advisor or a mentor to talk through them for additional perspective.
1. What is the biggest weakness of your business? What safeguards do you have in place to overcome it? We’re going to ask this question and the Weakness sector of the traditional SWOT analysis can help you identify it, but rarely allows you to think about what’s in your arsenal to combat it.
2. What happens if your revenue projections are off? Is there enough flexibility in your fixed costs to adjust? You are invested in your idea and it’s easy to let your conviction inflate your numbers. You need to check your forecast with a healthy dose of skepticism and if you can’t, find someone who will. It’ll benefit you tremendously to underestimate and be surprised rather than overestimate and be disappointed.
3. What are your most significant accomplishments? We can read your resume, but we want to know specifically how you’ve kicked ass in previous roles. Have you led a change initiative? Successfully navigated the talent market by hiring key players? Built a culture that kept people engaged and committed? Turned a setback into a victory? Those stories mean way more than the listing of your work experiences and the summary of your positions. As a founder, you are selling yourself just as much as you are your business. Get comfortable being able to share your impact and how that will benefit your new business.
4. What don’t you know? There’s so much pressure to be able to act like you know everything when you walk into a startup event or sit across the table from someone who is considering investing time or money into you. While we want to be reassured that you have the necessary expertise and confidence to protect our investment, humility is critical in all roles in all phases of business. The world moves too fast for us to know everything and if we know your blind spots, we can help fill in the gaps.
5. Do you have proof of concept? What kind of market indicators are telling you your business is needed? Can you name your first 10 customers that aren’t your friends or family? National statistics can provide some context, but if your market is regional, gather as much local data as possible to know who is going to buy your idea or product.
Ask anyone who’s started and they will tell you that they’ve pivoted, the market was different than expected and they have dealt with challenges that were unforeseen. That’s why we advocate spending less time on the business plan outline and more time on diving deeper into the financials, knowing your market readiness and getting started.