After setting up your corporation, one of the first questions that you’ll have to deal with if you want to raise money—usually as convertible debt or an equity seed round—is, “What materials do I need?”
The question has a many answers depending on the industry, product, market, and experience of the CEO and senior team. Fundamentally, you’ll need three components, namely:
An outline business plan.
A strategic financial planning model.
A company presentation in the form of a slide deck.
This week, we’ll give you a high-level overview of the outline business plan. In the coming weeks, we’ll address key issues related to your business strategy, financial model, and company presentation, then dig into the details to help ensure that you don’t miss something important or go overboard and waste time on frivolous pursuits.
Although there are exceptions, as a startup you should rarely write a formal business plan. Nevertheless, we find that entrepreneurs frequently don’t have good answers to deeper questions asked by investors related to target markets, why customers will buy their product, the sales process, and competition.
Providing a partial answer to an investor or answering with “I don’t know—I’ll have to get back to you" may be okay for one or two tough questions, but it’s not an acceptable answer to most questions. From an investor's perspective, you should know the important things about your business, and especially what drives the revenues, expenses, and capital requirements.
This is where your outline business plan comes in: It gives you a framework that helps you answer in advance the questions that investors will ask—questions that you need to be asking yourself and your team. An outline business plan is one component that will prevent you from coming across as if you don't know your business thoroughly when you give your pitch.
Outline Business Plan
So, what's an outline business plan? It’s a framework document that helps you think through your business strategy and ask and answer tough questions. It's also an internal document, not meant for distribution.
Outlines important components related to revenues, expenses, and capital.
Prevents you from missing key questions.
Challenges you to ask deep questions of yourself and your team.
In the coming weeks, we’ll dig deeper into the outline business plan and give you the points that you'll need to address. Stay tuned!
All The Best,
Did someone forward this to you? Great! Sign up here so that you don’t miss the next article in our series.