Here’s a trend going in the wrong direction.
Venture capitalists want to see business plans that clearly define the markets for a business. And that should be pretty obvious if any entrepreneur stops and thinks about it. After all, VCs are investing big money on the expectation that a business will be a commercial success.
Yet, apparently VCs are still getting business plans that don’t clearly paint a picture of how the business is going to make money — even with all the resources available today for writing business plans. This is according to Lynn-Ann Gries, Chief Investment Officer of Jumpstart Inc.
“Ms. Gries, when asked how an entrepreneur should make his pitch to a money source, explained that the most important point is to be able to clearly explain what the market will be for the company’s product.
She said that she is used to getting business plans which explain the new company’s technology or product in great detail, but that’s not what she wants. “I want to know exactly how you’re going to generate revenue and who your customers are going to be,” Ms. Gries said.”
Via Steve Rucinski at the Small Business CEO blog.
My own experience squares with this view. I find that most start-ups and early-stage small businesses, especially technology businesses, have great technology and products. What they lack is the ability to market and sell on a wide basis. Ninety percent of the time, marketing and sales are the weakest areas.