4 “Must-Haves” for any Entrepreneur

Posted by Dave
February 17, 2009

While I work with entrepreneurs of every stripe and color (the requirement being a technology focus), our program tends to attract mainly very early-stage entrepreneurs.  In many cases, they are pre-revenue, and a large majority of them are looking for funding.  What they need is coaching and mentoring, not simply an injection of cash, but that is a post for a different day.

One of the most important coaching conversations I have with many of these early stage entrepreneurs, is about their 4 “must haves”.  I usually use the toolkit metaphor.  With these four items in your backpocket, you have everything you need as a high-growth entrepreneur (and if someone asks you for something you don’t have, it can probably be derived from one of the four).

#1: Your Foundation – The Business Plan

Yep, that thing you’ve been putting off for a couple weeks now is absolutely, hands down, the most important task on your To Do list for an early stage entrepreneur.  It doesn’t matter if you’re not seeking outside investment – you need a business plan.  Get started now!

Don’t get me wrong; I’m not a big fan of business plans as science projects.  When I see a business plan much over twenty pages, I know it’s either an scientist enamored with their technology, or someone who doesn’t understand the purpose of a business plan and therefore puts in everything but the kitchen sink.

A business plan serves one simple premise.  It communicates the business opportunity associated with your idea, invention or concept.  It should not be confused with an operational plan or a research paper.  In communicating the business opportunity, here is an simplified overview of what anyone reading your business plan is looking for:

That’s it!  If you’re adding anything to your business plan and it doesn’t directly address one of those topics, then it probably doesn’t need to go in.  For the third time – it’s about the BUSINESS OPPORTUNITY.

#2: Your Foot in the Door – The Executive Summary

Once you have your business plan, it’s a simple process to abstract it up into a one to three page executive summary.  At least it should be a simple process.  For most entrepreneurs, it can be a real challenge condensing down to three pages.  Even more challenging is when the investor will only accept one page summaries.

The trick here, just like with the business plan, is remembering the purpose of the executive summary.  The purpose of the executive summary is nothing more than to convince the person reading it to schedule a follow-up meeting with you.  Whether that’s convincing an investor they should meet with you to get more details on your opportunity, or convincing an angel group to let you present, your focus in the executive summary should clearly be on why I should meet with you.

I’m bolding and italicizing a lot in this post, because these are new points for almost every entrepreneur I talk with.  So for the executive summary – don’t tell me how great your product is, don’t tell me how great you are, and certainly don’t forget to include the information I really want to see.  What do people really want to see in an executive summary?  Well, look for four bullets about 3 paragraphs up and what you need to include is abbreviated versions of those important points from your business plan.  In short – is your product real, how big is your market, how do you get there, and how good is the team?

It’s usually a good idea to have two, sometimes three flavors of your executive summary based on length.  I’ve seen requests for one page summaries, one to three page summaries, and three to five page summaries.  Regardless of length though, don’t lose focus on the content I outlined above.

#3: Funding – The Investor Presentation

Good news – you’ve been invited to present to an Angel Group or investor.  The investor presentation, in content, is very similar to your executive summary.  We usually see this as a Powerpoint presentation with 10 slides or so.

What’s very different about this presentation, is that it’s a presentation! That means you will be actually standing in front of people pitching your company.  This is truly a step that is very hard for many entrepreneurs and will put to the test all those intangible elements we so often talk about with respect to successful entrepreneurs.   Here’s a short list of what any good investor will be looking for:

Talking about each of those points would make for a nice series of posts in itself.  The point is, this is make or break time for your start-up and you better have an “A” game and bring it with you.  The blunt honest truth of the matter is, there are very few entrepreneurs that are really good at this phase of the process.  Some people are just born speakers.  For the rest of us, don’t assume you’re a good presenter.  In fact, you should assume you stink.  Practice, practice, practice – then practice some more.  If you really want to shake yourself up, break out the video camera and tape your presentation.  Watch the replay and you will probably see how much work you have to do.

Sorry for the bucket of cold water here, but your investor presentation is a critical step in building a high-growth startup.  Your odds of success are small to begin with.  Make sure your presentation delivery is top notch.

#4: Your Pitch – Elevators, Cocktail Parties, and Everywhere Else

Last but not least, let’s not forget your 30 second pitch, often called the “elevator speech”.  Don’t underestimate the number of times you will actually use this.  Like I am fond of saying “you find what you look for”, and once you are in the hunt for funding you will most likely find yourself often in situations where you have an opportunity to make a connection with someone “in the industry”.

You will probably have two strong reactions when trying to develop your pitch:

  1. Trying to reduce your business plan into a three page executive summary was hard enough; now you tell me I have to reduce the summary into a 30 second (or shorter) pitch?  You have to be crazy.  I’m an entrepreneur, not a magician!
  2. Jingles are for fast food, I’m starting a real business and it takes more than 30 seconds to describe.  Remember, I’m an entrepreneur, not a marketer!

All I can say, and I mean it with the utmost of respect, is get over it!  If you truly are an entrepeneur and you have a high-growth potential, scalable business looking for outside investment, then you darn well are a marketer and need to be a magician.  Along the way you’ll probably also be CFO, IT support, sales and delivery person.

This is what I tell almost every entrepreneur I work with, and is maybe one of the hardest things to get them to embrace:

It’s NOT about your product/idea/invention/innovation.  It’s about the business opportunity.

So, if you don’t have sales and marketing blood flowing in your veins, then you need to hook up with someone that does, or re-think your life as an entrepreneur. The ability to convey the essence of your company in a brief sentence or two adds incredible value to your start-up.

Final thoughts

I hope this short post was of value to you.  Developing these four elements will take some time, but once they are in your quiver, you are prepared for virtually anything you may encounter on your path to funding.

I do have a template business plan that I use to work with my clients from time to time.  While there is no perfect business plan structure, there are common elements to all good business plans.  In future posts, we’ll talk a bit about those elements and business plans in general.

So I’m curious to hear from the entrepreneurs in the audience.  Do you agree with my four required elements?  What has been your experiences with each?

Entrepreneurship

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