You are if you don’t have a business plan first.
Seriously: how can you boil it down to the core if you don’t know your basic strategy such as your identity, market, and focus? How can you set a scale to it without some idea of reasonable expectations in sales? How can you possibly talk about investment without having figured out how much you need, for what, and what kind of return you’re aiming for?
This comes up more these days because people seem to be confusing the output of the plan — whether it’s formal document, or simple pitch, or something in between — with the planning.
Simply put, not every business needs the full formal plan, but every business needs a plan. Think through and write down (not necessarily on paper, probably on a computer, but somewhere) your core strategy, assumptions, review schedule, dates, deadlines, task responsibilities, and (pause here for breath) basic business numbers. Those basic business numbers are the sales forecast, expense forecast including personnel, startup costs, and startup funding.
Sure, a 60-second elevator pitch is a pretty short piece of information, but people expect it to contain some significant foundations. And, if you think about it for even 60 seconds, the way you figure out how much money you need is by doing those basic numbers and tying them together. You can’t just spout a figure without risking a follow-up question. What are you going to spend that money on? How are you valuing the company right now? What’s your exit strategy? What kind of returns can you talk about?
Take for example the question of how much money you need. You add up your starting costs, subtract what resources you already have, then project sales and expenses and add what it’s going to take to meet expenses during the early months, when sales are just starting.
Or as another example, your target market. Can you describe your ideal customer and can you explain in a few seconds who isn’t your target market? What if you’re asked what you’re not doing? What about your strategic focus or assumptions or whatever.
So don’t say you don’t need a plan because you’re just doing a pitch. You can’t do a decent pitch without knowing first what you’re saying. Without a plan, you’re pitching naked.
And, having said (or written that), I’m going to use this as an introduction to a five-part series on the elevator pitch, starting with part 1 soon. Stay tuned to this channel.