I would like to suggest a new form of an executive summary of a business plan.
Instead of the typical blah, blah, blah that talks about "competitive advantage" and how you are going to be yet another $100 million company in five years, write a one-pager sales pitch for your product or service to your prospective clients.
What's your pitch?
In our work as loan brokers, we talk to hundreds of entrepreneurs every month who are calling us because they think they need or want money. And our job is to quickly figure out what is it they really need and why, and if it has to do with money at all. This is not an easy challenge, as often a perceived money issue is really about something else going on in the business.
For example, I recently spoke with a small-business owner who believed he needed money quickly because his company had seen a dramatic drop in its marketing campaign conversions. And I had to explain to him that though we could get his company a loan to cover its cash-flow blip, if he didn't focus on solving his core marketing problem, the Band-Aid I could put on his business would not help in the long run.
In many other cases, the entrepreneurs we speak with have been advised by others to write business plans and or build financial forecasts so they can raise money or get a loan. And in many cases, instead of doing this exercise themselves, they've hired expensive consultants to help them and don't really understand what's been written or modeled.
When we listen to entrepreneurs' pitches, we ask them what should be a simple question: "Pretend that I am a prospective customer, and explain to me why I would love your product or service." At least half the time, the entrepreneur gets tripped up.
This is a big warning sign. If you can't answer this question, stop whatever you're doing, and without the help of any advisers, write a one-page pitch. Once you've done that, run it by a handful of prospects and see what reactions you get.
If you can't get through this exercise, I won't help you borrow money, and I can't imagine anybody would want to invest in your company.
When's the last time you took an hour to clearly articulate your sales pitch in a page? Irrespective of the hundreds of other things going on, and whether or not you’re looking for money--take a step back and try it. The exercise could be illuminating.