Like most people I hate writing business plans, I want to get on with the business at hand rather than keep writing and re-writing lots of words about what I plan to do!
This must also be true for many investors too as they don’t like reading them, they prefer a pitch or PowerPoint! However, they DO want to see a plan eventually to decide to invest or not.
Business plans do have their place – they are a very useful way to logically sort through the teams thoughts and to have one cohesive document that summarizes the intent of the business and in that regard they are very important.
In addition, once you have some interest in your business idea you do need to commit it to paper for the deeper dive people will want to give it once you have their interest. Indeed many investors still not even think about interacting with you until they have some form of “paper” document to read first.
This is where the “killer” executive summary comes in…it’s like your “elevator pitch”, you can’t get through all the apathy and lack of interest in the business plan unless you can get people to be excited about reading it.
What is an Executive Summary anyway?
In theory, it’s a very punchy overview of the business plan in condensed form. However in my view it goes beyond that, it’s like the headline in a newspaper, it’s the “pitch for the pitch” – it’s job is to sell the reader to keep reading, just like a headline.
The executive summary is often your initial face to a potential investor, so it is critically important that you create the right first impression. So you need to think of the summary as being your one and only opportunity to engage, enthuse and move the investor to action. To make them WANT to read past the first page and to talk to the team further about the business.
Often this is the ONLY part of the business plan that get’s read and it’s certainly the only part you will get to forward in the first instance to potential investors.
As a result it had better be “killer” otherwise you stand no chance at all of getting into the tiny % of startups that get to stand in front of investors and actually raise funds. Only 3 out of the 60-100 plans seen by the Band of Angels per month get to pitch, the first pass in the process of weeding out the startups is the plan!
What should I include?
OK so now we know that this is a critical document and it is also a sales document, not a dry summary. Therefore the first stage in the process is to understand the sales process it want to achieve and the outcome required.
The sales process should follow the age old A:I:D:A process. This means:
A: Attention – The very first line of your summary had better be hard hitting and get the readers attention (like the headline in a newspaper) or you will lose the impetus. So consider very carefully what’s so exciting about your startup and put that first. This could be your “elevator pitch” in writing. Make the statements direct and specific, not abstract and conceptual. Do you have some world-class advisors, big name companies as trial users, a brand name founder, investor or advisory board member…put these details up front!
Try and make it stand out and be exciting…(just like headlines!)
I: Interest – This quickly builds on the first statement developing the readers interest in your idea. Here you tell the reader in “plain English” what the idea is, what the “massive pain” that exists in the market is and how you plan to solve it with your idea. Keep this simple and easy to understand. Make it clear that the problem you are fixing is big (i.e. there is a large market opportunity, pref. of $1bn if you are pitching VC) and that there is an immediate need from the market (i.e. someone has a big headache and you have come up with the aspirin, not a vitamin) and how you plan to win against the competition.
You will also need to include the basics of the full plan like: the team (highlight what each team member brings to the idea specifically i.e. one is a technical expert, one has worked in this market on knows it intimately etc), go to market strategy, value proposition, competitors, market details (what’s your segment), your sustainable competitive advantage, your business model, financial summary, money required and for what purpose, SWOT analysis etc.
D: Desire – Now I know that you have a good idea (and understand what you do), you need to build up my desire to move forward to learn more. In the summary you can now tell me a little about how talented the team is and how successful you have been in the past, or how you have special knowledge and skills that will make you the one to “back”. You can add any customer successes, feedback from research or “proof” that this going to be a huge opportunity. Finally, you can also add any investors that have backed you to date and any money raised. I would even let the investor know that you have done such a good job that there isn’t much time to invest before all the money you need has been provided by others unless they engage now…!
A: Action – This is the desired outcome from the investor after reading the summary! See next.
When you have finished you should have a 1-2 page document max that explains in condensed form why you have a great opportunity and why the investor should act NOW.
What is the outcome required?
This depends on how the summary is being used, for example if this is designed to get the interest of the “network” and have a friend get you into a VC or investor then that should be the focus of the summary – as a way to get an intro. If it’s being sent to an investor directly then it needs a slightly different approach and if it’s for a bank or other type of institution again it needs a different approach. I used to have 3+ versions for these interactions.
- As a way to get into an investor via a third party: In this case there is an extra and critical component and that’s the intro letter. Again, this is designed to get people to engage and move to action! In this case you need to write a compelling mini-summary with your elevator pitch that can be “forwarded on” by your network. The summary itself can be in your own format.
- Directly to an angel group, investor or VC: In this case you will probably need to format the summary in a special way that the recipient requires. Check the website of the Angel group or VC and ensure you deliver what they need in the form they need it. DO remember however that originality and getting attention will be key to standing out from the rest. Use the content already created but format how they want it.
- For the bank or a supplier: In this case when trying to get people to back you or support you but not necessarily invest directly you need to take a slightly different approach. perhaps you don’t want to give the same level of detail for suppliers (not giving away any secret sauce) or in the case of the banks more financial info as they prefer facts and figures.
In all these approaches you need to consider the “audience” and to write accordingly. It’s no good just sending out a generic summary to everyone, you are selling and need to focus on the needs and wants of the person reading the document if you wish to persuade them to deliver the desired outcome.
What not to include
NEVER come across as arrogant and overconfident – I know this is a sales document but it needs to be based on FACTS and not B.S. Make sure you don’t fall into the traps outlined in my other posts about what not to include in your plan.
Never, ever, ever make any claim you cannot backup! If you say the market is $X big then have details to how you came up with the number. If you have a customer then you had better be prepared for a reference call to them, the same goes for connections and contacts. If you say a big named person is a backer you can bet the investor will contact them….NEVER be afraid of being open and honest. Do not use complex jargon, too many adjectives, long sentences, “waffle” and things that don’t concisely convey your message.
Try and focus your efforts on building credibility by showing a balanced approach to the risks and rewards of the idea and any problems/issues you see going forward. This is the best approach to gain trust and then eventually $$ investment.
You may want to write the full plan first and then come back to the summary in the end so that you can get all the core facts ready in advance. If you want some further details on business plans and how to craft some of the “parts” I suggest you read some of my other posts here:
Watch this: http://ecorner.stanford.edu/authorMaterialInfo.html?mid=1920 (superb video from Ron Conway)
Writing a good and punchy “elevator pitch” is way harder than most people think. Plus I find that I really need to teach this skill a lot with my Stanford and UC Berkeley MBA’s to help them both with distilling their ideas, perfecting their business plans and finally pitching VCs – so this skill turns out to be very important and useful!
The reason is that most people don’t produce winning elevator pitches is that they don’t have the combination of good copywriting skills, the ability to be brief and finally the focus to just choose the most important “USP’s” (Unique selling points).
Frankly I find it very hard myself as I generally have a very complex software product to “sell”, I even find it hard to summarize myself in a few words that are compelling as I also get involved in many things! So if you are like me and want to try and distill the essence of you, your product or company read on.
First, what is an elevator pitch?
Well depending on the personal asking it could be a few things i.e. if it’s an investor then its a punchy summary of why your company is an interesting investment, whereas if it’s a casual inquiry like “What kind of work do you do?” you need to give them a brief answer – and each reply in roughly the time span of an elevator (lift) ride.
Elevator Pitch Essentials Author, Chris O’Leary, says:
“An elevator pitch is an overview of an idea, product, service, project, person, or other Solution and is designed to just get a conversation started.”
So this is a 60 second or less summary about the topic at hand, usually you or your company.
While the term “Elevator Pitch” is generally used in the context of entrepreneurship, and in particular in selling ideas for new businesses to Venture Capitalists, the truth is that the idea can be used to help sell a wide variety of things.
As you can see then, having a “canned” but punchy response can help you in many ways from networking events, to chance meetings with people to stand up pitches about your company – in each case you have a very short time to impress and then get some form of positive action – like “tell me more…”
“Summarize the company’s business on the back of a business card.” — Sequoia Capital
My favorite elevator opportunity I have seen was in a movie called “in pursuit of happiness” where Will Smith has a potential employer in a taxi and he has to try and convince him to give him a chance…in this case a Rubik’s cube came to his rescue but he really could have done with an elevator pitch! On the other hand Meg Ryan in working Girl did a great elevator pitch (literally) and got the job.
What is a compelling elevator pitch?
Most people totally screw up their elevator pitch, this is generally because they haven’t taken the time to craft one right for the circumstances and the one they have lacks power and focus on the desired outcome.
So we need a tightly focused mini sales and marketing message, right for the person or people you are delivering too and on the right topic. It also needs to lead to some form of action or outcome you desire.
The ideal length is in the order of 10-12 words or in that range for a personal intro and about 150-225 words for a business pitch.
Like any sales message it needs to offer some form of interesting “benefit” to the recipient – A "hook" (Open your pitch by getting the Investor’s attention with a "hook." A statement or question that piques their interest to want to hear more.)
Depending on your outcome, the message wants to be strong and unique enough to get people to actually “care” about who you are or what you do. Plus you want them to want to go on to learn more so it’s important not to be boring, trite or offer up the same old message.
Ideally the message will also be memorable either in it’s content or with the passion (Investors expect energy and dedication from entrepreneurs) with which you deliver the message, preferably both. A memorable pitch also enables others to spread the word about you effectively.
Finally, as i said you want some “action” to follow so don’t be afraid to ask for what you need, is it more time to tell the investor more – or maybe a quiet corner at a networking event for a longer chat, a business card or a referral – whatever it is, close the pitch by asking for something.
How to create a compelling elevator pitch?
One of my favorite people on this topic is Mike Southon and he is a world famous entrepreneur and author of the The Beermat Entrepreneur series. He says of an elevator pitch:
In sales, there is the concept of "golden nuggets", where as many as 50 amazing features of your product are crammed into literature by your marketing team. The problem is that most customers have very short attention spans and can only remember three things about your product. As soon as you mention the fourth golden nugget, the first, and probably most important one, drops out of their memory.
By the time you get to nugget number 50, all the most compelling ones have long since gone, and the prospective customer has also lost the will to live.
Rather than being to close the deal, the goal of an elevator pitch is to just get the ball rolling; to start a conversation, or dialogue, with the audience.
The five P’s:
So the methodology for a good elevator pitch is simple, and centers around five ‘P’s:
1. So this process is like creating your value proposition, you need to start off by looking at the nasty horrible immediate problem – or ADVIL – that people wish to solve when considering you or your business. So we start by looking for the pain? You should also ask: What is the pain or problem that you plan to solve?
The larger the pain, the more likely people are to give you money to take it away. Pain can come in many forms, but if your product or service saves time and money, that is a good start. In reality you also need to need a pain that needs in instant solution (like a headache that needs an Advil to stop it right now) as opposed to a pain that needs a vitamin to slowly get rid of it. Immediacy is very important.
2. You have to explain in simple terms the premise of your business. Exactly what is it you do? For this, you need to be literal and to the point. It’s amazing how many people can’t articulate what they do in a single sentence. Keep it punchy, pithy and potent (yes more Ps).
3. You need to talk about your people because entrepreneurship is a team game. Every investor says they look for a credible team rather than a good idea, and every customer says they buy from people not companies.
4. Proof is the hardest element to provide. Why should anyone buy from you and not your competitors? The best proof is examples of your happy customers, in the form of relevant case studies.
5. Finally, you must provide your purpose, and the most important purpose of any business is to make money.
Potential investors will be looking for a return on their investment, and prospective customers will only want to know that you run a sensible and profitable business, to ensure reliable and consistent delivery of your products and services.
Or may its the 9 C’s:
The book “Elevator Pitch Essentials” uses a longer version of the above to craft the elevator pitch?
An effective elevator pitch contains as few words as possible, but no fewer.
Rather than being filled with acronyms, MBA-speak, and ten-dollar words, an effective elevator pitch can be understood by your grandparents, your spouse, and your children.
An effective elevator pitch explains the problem your Solution solves.
An effective elevator pitch explains why you are qualified to see the problem and to build your Solution.
An effective elevator pitch stays at a fairly high level and does not go into too much unnecessary detail.
As much as is possible, an effective elevator pitch is also specific and tangible.
Every version of an effective elevator pitch conveys the same basic message.
An effective elevator pitch addresses the specific interests and concerns of the audience.
Rather than being to close the deal, the goal of an elevator pitch is to just get the ball rolling; to start a conversation, or dialogue, with the audience.
Finally, Avoid mistakes:
- Stick to hard facts and numbers! Avoid assumption or BS’ing; you’ve got to instill integrity in your message.
- Make the pitch easy to understand; avoid acronyms or any jargon that your intended audience won’t comprehend.
Examples of pitches:
TechCrunch Elevator Pitches is a community video project that allows entrepreneurs to pitch their business idea to the general public and have it voted and commented on by viewers. Please note that this particular project allows one minute pitches, yet there are lots of submissions and examples so be sure to check it out.
Vator.tv is a video site featuring a rather non-traditional spin on the elevator pitch. There are plenty of video pitches by numerous companies and entrepreneurs.
This should provide the basics for delivering a good elevator pitch.
If you are making any form of presentation you will benefit from these quick tips.
Get the content and flow right:
First, make the presentation flow correctly – as most presentations are trying to convince someone of something, I tend to use the old A-I-D-A (a 1950s acronym for Attention/Interest/Desire/Action) system to build to a conclusion.
Kick off with an attention getting statement to show the audience they should listen.
A = Get attention right from the start of the presentation – do it with enthusiasm and excitement!
I = Build on this great start with why you and your topic are worth hearing about.
D = Build in some exciting data points that build on that foundation BUT only tease them, don’t tell all yet…use that to get some action.
A = Ask for some action, in other words close the pitch with…for e.g. in an investor pitch you could say…”to learn more how we can make money together come and speak to me after this pitch…”. You are trying to make them want to do something that moves towards you outcome.
If you are doing a factual presentation that needs agreement in the room then close all the data with a strong argument to go with your idea or along with your outcome.
Things you should remember for any presentation are:
B = Breathe, yes, breathe. Calm your nerves by breathing slowly and forcing the rate down. Take a few deep breaths before getting up to pitch.
S = Stance. Again, its important to stand correctly. Most people, including me when I started, try leaning on things or folding their arms or moving from leg to leg. Don’t do it. Practise keeping you lower body face on to the audience and static, using your upper body to gesticulate
E = Eyes. Once you are standing in front of everyone, take a cool, slow scan of the room and try to look at the audience ‘row by row’. This shows confidence and it gives you a second to relax and get ready.
SM = Now smile at the audience and try to empathize with them. Again this helps you relax and smiling will actually improve your state.
H = Hug. Or better group hug, this means open your arms and greet the audience. You don’t fold them shut like a hug but just hold them open as if presenting to 1000 people for a second.
E = Energy, now launch into your pitch with your welcome statement with energy, enthusiasm and excitement. Your passion must come across right away to help engage the audience and get their ATTENTION!
Things to also make the presentation go smoother:
If you are in front an audience, take a glass of water up with you, always. This is a great way to think about answers to questions or to give you a ‘breather’ between slides as well as soothe that dry mouth syndrome.
Try some facial exercises to beat the ‘lock jaw’ that afflicts many of us – the simplest is the say AEIOU while stretching the facial muscles as much as possible.
So what about the content?
Well it’s simple really, you are SELLING in most cases, even if its talking to peers, you are trying to get some action or convey useful data in most cases…
So remember this – this presentation is about selling YOU, you are the stand up comedian for a few minutes – you need to entertain, excite and persuade.
Think about this for a minute – most of the books you have read or the way you may have been taught to present is around style and content not performance art!
BUT this is the key skill – you have just a few minutes to get people from BORED to I MUST speak to this person to learn more – without any help from PowerPoint.
It’s all about you and them.
Your slides should be simple and NOT tell the audience everything they need to know, they are a “prop” for the main subject…YOU! Use them to get across very core facts with the minimum of data or bullets. Use images and ideas as the basis for the “words” you will speak, the slides should not do the work for you, that’s up to you.
More about slides here:
Getting yourself in peak state:
So 50% of your preparation needs to be about mentally preparing yourself to relax, breathe, speak clearly, look people in the eyes, use your hands and face with passion (like an Italian) to communicate effectively.
Also, you can use techniques to get you ‘charged up’ (or in state) before you go up on stage. You can do this in your head with positive affirmations (I AM a great presenter and I have a fantastic opportunity for my audience – if you believe it then it will come across when you speak) or combine it with moving your body. I like to find a quiet place and rev myself up with a ‘yes, yes, I am a presentation monster’ while punching the air a bit but this may not be your style! Anything that gets your body moving as well as your mind will help.
Put yourself in their shoes, what would get you to sit up in your chair, hanging on every word?
The other 50% is getting the key data to them in a fast but effective fashion.
I hope I don’t need to remind you to practise and time the pitch to match the needs of your event/venue.
Writing about “how-to” startup could take 1000s page or just a few. In the last 20+ years of doing this I have learned a lot, mostly through my own dumb mistakes and I would say that again if you had to choose the best advice for a startup success (non-task related) it would be persistence/determination.
In my book I rate these No.1 in the successful entrepreneurs armory…
So how to “compress” the learnings, well one way is to stick them on a few slides…so here goes. But these examples are just a quick overview not the be all and end all…and they are done by others as you have plenty of my advice in my book!
It’s rare to find a quick summary that resonates but the the very successful guys at Venture Hacks have a nice quick slide show for that makes great reading for tech startups, see what you think:
Another one I really like (not just because of the title):
Again this is for tech startups again, esp. VC backed:
Again and again I find myself telling my MBA students about how to present.
They tend to get everything wrong, every time, no matter how many times I tell them or ask them to learn.
Why? Well it’s probably because it’s very hard to “simplify” ideas and then present them in an easy to understand way, especially if you are very highly educated!
I find it very hard myself and I think it’s an art that people don’t spend enough time on or invest in…communicating clearly for almost all my MBAs is key to their final results and yet they leave it to the last minute, prepare badly, present badly and produce terrible materials…
So I am writing a quick post to set them on the straight and narrow once and for all and I hope this helps you too!
As they are all very busy I want to summarize my guru (Garr Reynolds) on the core things you need to know and then suggest you invest in his excellent book right away: Presentation Zen.
Organization & Preparation Tips
Top Ten Delivery Tips
Top Ten Slide Tips
Some sample slides
How to develop the right slide design by Guy Kawasaki
See my other posts on presenting and investor pitches:
- The Six Minute -No Slides- Angel Presentation
- Even more advice on presenting to investors…preparation is key
- Why startup pitches fail
- Top questions you may be asked during an investment presentation
- How to present to a VC to win
- The definitive guide on how to present to Angels (by angels)
- Key things you must do when presenting to win