No one reads anything other than the first few lines of any article. I’m willing to bet, you probably won’t finish reading this post. The same goes for business plans.
The harsh reality is these days, no investor will read a business plan. You are lucky if they read more than the first page of your executive summary. So what is an entrepreneur seeking investment to do?
The simple answer is a visually appealing pitch deck with no more than 15 words a slide and no more than 10 slides. And by visually appealing, I mean the content on each slide can be digested in less than 10 seconds.
Have I lost you yet? I’m willing to bet I’ve lost at least 50% of you because I didn’t have a picture in the first paragraph.
If you are still around, I can share a recent experience I had at a San Francisco venture capital conference. For the sake of this blog (and my own sanity), I decided to be the “academic in the room” and ask a panel of seasoned investors the value of a business plan. Out of six investors on the panel, four of them actually laughed out loud. These were some of the answers:
“No one reads business plans anymore.”
“The only people who read business plans are our poor interns that management thinks will learn something from them.”
“I mean, I suppose it is a good academic exercise, but we never actually ever read them.”
“Even those companies we invest in, the business plans end up in a filing drawer somewhere that no one ever sees.”
Are you still reading this? I’m impressed!
While it may seem like writing business plans is hard, condensing a concept from 30-50 pages into 10 visually appealing slides is even harder. But if we think about it, if an entrepreneur cannot convey the opportunity within 30 seconds to a potential customer, why should an investor be any different? According to CBS News, the average American sees 3,000-5,000 brands a DAY. Talk about competition for attention.
The process of business planning is important, but as Winston Churchill stated, “Plans are of little importance, but planning is crucial.”
The exercise of going through the business planning process is a necessary step. However, the key deliverable out of that process for any entrepreneur seeking investment is the communication of the opportunity in less than five minutes (or if you are really good, less than three).
How to get this done is a bit outside of the scope of this post (and even if I included it, only about 10% of you have made it this far into this post). One resource I use with my students is a book called Get Backed. Just FYI: I have no affiliation with the authors or the publisher. If you want to check out their site, you can enter your email address and get Chapter 2 for free.
Another free resource and example I encourage my students to model is AirBnB’s original pitch deck that raised $1.3 Billon. Check it out here.