HOW TO PRESENT A BUSINESS PLAN >> Each section contains key Action Items located within the downloadable Action Guide >> Click to Download Action Guide.
You’re most likely reading this Action Guide for one of two reasons: A) you’re planning to start a business and you’re seeking capital to help get it started; or B) your business is already established, you’re starting to grow, and you need additional capital to help take the business to the next level. In either case, you need a written business plan that sets out why a potential investor should put money into your company. The How to Write a Business Plan – Action Guide is an excellent introduction to help you prepare your business plan. If you’ve already written a business plan, please get it out because we’ll be referring to it regularly.
You’d probably like to think that a potential investor will read your business plan, decide it’s just as fantastic and persuasive idea as you do, and pull out his or her checkbook on the spot and fund you. If you believe that, let me tell you about a great investment opportunity in a bridge in New York! While your business plan may be very well written and highly persuasive, there is very little chance that an investor will sit down and read it. Before anything else, you need to persuade the potential investor to take time to consider what you have. Even then, you may not get him or her to read your plan; instead, the potential investor may ask you to give a presentation. This is because potential investors are oftentimes entrepreneurs themselves, and the truth is that a high percentage of entrepreneurs hate to sit down and read documents. Even if the potential investor is willing to sit down and read your plan, you’ve got to make your plan stand out amongst all of the others. You’ve got to make your “brilliance” shine beyond that of every other plan the investor sees.
That’s why having a written business plan is absolutely necessary, but not sufficient, for success and where this course comes in. This Action Guide will help you to accomplish the following critical objectives:
First, it will help you convert your business plan into two essential presentations:
- The two essential presentations we’ll discuss are your “elevator speech” and your formal investor presentation.
- The “elevator speech” is a short verbal and written presentation that will help get potential investors to consider your plan.
- I strongly believe you need to have both presentations.
Second, it will help you get more comfortable making presentations to potential investors
And third, and most important, it will help increase the probability of your getting a positive response from your presentation.
Let’s now talk about the two types of presentations. The “elevator speech”, as you may already know, is a talk you can give in the time it takes to ride an elevator, probably about 30 seconds. The other, of course, is a formal presentation before a potential investor group. The formal presentation should take anywhere from 10 to 20 minutes, but in no case more than 20 minutes.
The elevator speech has only one purpose: to get you an opportunity to do one of two things: A) get a potential investor to read your business plan; or B) let you give an oral presentation to the potential investor. It must be short and to the point. You should be able to convey the elevator speech either verbally (when you meet someone) or in writing, either in a letter or an email. The 30 second speech is identical.
Both the elevator speech and the formal presentation have only, and the same, purpose: to get you another meeting with the potential investor. It’s the very same thing my father, the very best salesman I’ve ever known, used to say about a first sales call. He said there is only one objective of a first sales call: to get another appointment. Except for service as a B-17 captain in World War 2, he sold continuously from the late 1930’s until his death in 1987. He said he virtually never closed a sale the first meeting. The key objective was to establish rapport with the prospect and to get invited back for another meeting. The very same thing is true for you with your elevator speech and your formal presentation.
The focus of this Action Guide is what is contained in your elevator speech and your formal presentation. I divide each into four parts, as follows:
- Part 1: the market’s need and your solution
- Part 2: marketing, sales and distribution
- Part 3: making money
- And Part 4: payday.
Let’s now talk now about each of the four parts of your presentation in a little more detail to help you understand the purpose of each of the four parts and, more importantly, to understand how the four parts all fit together.
Both your elevator speech and your formal presentation contain these same four parts. In fact, the elevator speech is just a miniature version of the formal presentation. While you’ll give an elevator speech before a formal presentation, I reverse the order in this Action Guide: we’ll first talk about your formal presentation, then we’ll talk about your elevator speech. This is because you need to prepare the formal presentation first, then the elevator speech, even though we know you’ll actually present the elevator speech first.
Let’s begin with part one: the market for your business. Successful businesses share the following in common: they sell a product or service to a customer that helps the customer to solve a problem. Think, for a moment, about your business. Why will, or do, customers buy your product? At the end of the day, they only buy because the product solves some type of problem for them. Every business has competition and the competition sells products and services that provide an alternative to your customer. You may be able to persuade a customer to try out your product or service, but the customer won’t come back if your product or service doesn’t solve the problem in a way that the customer perceives is better than the competition.
That “better solution” may take the following forms:
- You may solve the problem in a new, unique, or better way
- You may solve an old problem less expensively than your competitor
- Or you may permit your customer to do something he or she couldn’t do before.
In this first section of your presentation, you need to do the following:
- First, describe the need in the marketplace that your product or service addresses
- Second, you need to show how your product or service solves this problem better than the competitor does.
This is the base upon which your business is built. If your product or service can’t do this, you really don’t have a new business, at least any new business that a prospective investor will be interested in making an investment. Now you have, of course, already thought about this, but your prospective investor probably hasn’t. What you’ve got to do is to build the case for this in the first part of your presentation. Furthermore, you need to assume that your potential investor knows absolutely nothing about the marketplace, the products and services in the marketplace, or anything else about it. You’ll have about one fourth of your total presentation to do this, so if you’ve been given 15 minutes to do your pitch, you have approximately four minutes and fifteen seconds to build your case. Obviously, this is going to take some careful thought!
Once you’ve built your case that your product or service addresses a market need in a compelling way, you need to build a case for how you will sell your product or service. In my experience, this is oftentimes the weakest part of the presentation. I find too often that the entrepreneur is so convinced that he or she has the proverbial “better mousetrap”, that there is an assumption that customers will obviously see it and break down the doors to buy it. If only it were so easy! Let’s take a moment and talk about why that’s a fatally flawed assumption. Right now there are literally thousands of new businesses out in the marketplace with really interesting new product and service offerings. I’ll bet more than a few of them are things you’d consider buying. In fact, you’d love to buy at least of few of them because they really could help you. So why aren’t you buying? Well, one very good reason is because you probably don’t know about them. The classic assumption that if someone invents the “better mousetrap”, customers will “beat down the door”, just isn’t true because they probably don’t know about the better mousetrap. You’ve got a terrific new product or service for the market so why aren’t they beating the door for you? Potential investors know this is a big, big problem. If they’re going to invest in you, you’ve got to present to them a compelling case of how you’ll overcome the marketing, sales, and distribution problem: how you’ll get your terrific new product or service into the right distribution channels and how the right customers will learn about your product and make the purchase. Just as in part one, you’ve got to present this in a very short period of time, probably just a few minutes.
Once you’ve built your case for your product or service in the market, and you’ve presented your approach to marketing, sales, and distribution, you then must present a case for how your business will make money. This is the third part of your presentation.
Here you need to accomplish the following:
1) Describe the basic economics of your product or service. For example, you make your new widget for five dollars and sell it for ten dollars. Your monthly overhead cost is ten thousand dollars so you need to sell two thousand widgets to break even.
2) Describe why you think your ten dollar selling price makes sense
3) Describe how long it’s going to take you to reach breakeven
4) Calculate how much money you’ll burn through before you achieve breakeven
Once again, you face the challenge of time. You’ll only have a few minutes to convey this information in a convincing way.
Having completed your first three parts, you then move on to the final, climactic part of your presentation – what I call “payday”. You need to accomplish four things in this section. First, you need to be clear how much money you’re asking the potential investor to provide and you’ll need to describe how that money will be used. Second, you need to describe the management team you’ve assembled, or will assemble, to accomplish your plan. Third, you need to describe the milestones you’ll achieve with the money you’re requesting. And finally, you need to describe “payday”: how the investor will reap the reward he or she desires. Of course, another simple task to accomplish in four minutes or so!
You’ve, doubtless, thought about these points as you’ve prepared your written business plan. Now your challenge is to condense your thinking. In this case, I always am reminded of Samuel Langhorn Clemens, the great American author who wrote as Mark Twain. In a letter to a friend, he once said: “I would have written a shorter letter but I didn’t have the time”. Preparing your investment presentation, and even more in the case of your elevator speech, requires you to think very carefully about what you’ll present. Each presentation is an excellent example of Mark Twain’s “shorter letter”. So your first challenge is how to take all of the content of your business plan and describe it clearly and concisely in a “shorter letter”. Beyond that, your next challenge will be to make that “shorter letter” interesting: to capture the attention of your listener.
Each of the next four segments of this Action Guide will be about one of the four parts of your presentation. We’ll discuss specific ways to create your version of Twain’s “shorter letter”. After that, in segment six, we’ll talk about how to prepare your elevator speech, your “shortest letter”. In segment seven, we’ll talk about ways to make your formal presentation highly effective. Even if you think you’re a lousy public speaker, there are some simple, straightforward things you can do to make more effective presentations. Alternatively, if you’re already a very good presenter, I’ll describe some useful things you can do to become an even better presenter. Even world-class public speakers can always get better! Beyond those tips and tools, it’s a matter of practice, practice, and some more practice. Good to great public speakers aren’t born, they’re made from training and practice. Finally, in segment eight, we’ll talk about next steps you can take to help make your elevator speech and formal presentation highly effective – to get you to where my father said was the desired result of any first sales call: your next meeting with your potential investor.
ACTION ITEMS: Complete the Action Items in your Action Guide.
FIRST, have your Business Plan in front of you so you can reference it throughout this Action Guide. (USCFE recommends completing How to Write a Business Plan before proceeding if you do not have a Business Plan.)
SECOND, open your business plan and mark the sections, for later reference, that answer the following questions. These sections you mark will be the building blocks you can use to construct your presentation and elevator speech.
1) Mark you business plan where it explains why customers will or do buy your product/service, how it solves a problem in the marketplace, and how is it better than what your competition offers.
2) Mark your business plan where it explains how you’ll get your product or service into the right distribution channels and how the right customers will learn about your product and make the purchase.
3) Mark your business plan where it explains how your business will make money, the basic economics of your product or service, why you think your selling price makes sense, how long it’s going to take you to reach breakeven, and how much money you’ll burn through before you achieve breakeven.
4) Mark your business plan where it explains how much money you need from investors, how this money will be used, who makes up your management team, what milestones you’ll achieve with the money you’re requesting, and, how the investor will reap the reward he or she desires.