In my experience of listening to so many business pitches, reviewing their business plan, penetrating through Investors Memorandum there are some key striking gaps which come straight on my face. Most plans are silent on “How” of the business plan which is the most crucial component of any plan.
Recently, I was reviewing an investor's memorandum of a healthcare business where it started with Landscape of business, global positions, India scenario & opportunity, market segmentation, healthcare spends as a % of GDP on these products, global trends and thesis & thesis of how these spends would increase by ^*&% by 2020 etc…etc. This would be like 20 pages of research and when it came to presenting about the Investee firms details it was wrapped up in just 7 pages. Surprising, right ?
But this seems to be common…in this case, it talked about firm's production capacity, marketing potential, their key strengths, financials and valuation. Is that it ? It's not about just 7 pages but I think the real substance “How” of the business plan was missing. So the big question here is – whether their business plan is hollow ? Nope, I think their growth game is hollow, there isn’t enough thinking gone into defining "How" of the business plan. They think that just because industry is growing at x% the y% of growth will just fall into their lap
Here are few ESSENTIALS of your Growth Strategy that you should think through and have it in your business plan besides the usual B plan content :
Customer
– What’s that SINGLE KEY significant VALUE you bring to your customer?
– How are your products/services REALLY DIFFERENT from the competition?
– Why do you think you are in a BEST POSITION to leverage this opportunity?
Pricing
– What's your PRICING strategy?
– Why do you think people WILL PAY this price?
goto Market
– What’s your GOTO MARKET strategy?
– Why do you think this is the BEST WAY forward?
Talent
– Who are those KEY TALENT for your business?
– Which are the talent missing and how are going to bring them on-board especially in Startups, SMEs which are talent ridden?
Operations
– What are your KEY PROCESSES that will bring operational excellence and minimize turbulence in scaling up?
Key Financial Indicator
– What are your top 3 or 5 key FINANCIAL METRICS that you will review?
Derive key financial metrics for your business like Revenue per customer, Cost of customer acquisition, Cost of retention, Cost of servicing customer, Sales team coverage ratio, Debtors turnover ratio, working capital to sales, Order to cash cycle, Fixed Asset Utilization ratio, etc..
Team
– What are the key qualities that Promoters, Core team brings to the table?
– Why together it makes a best team?
Think through and make this a part of your business plan. It will just not make your Business Plan look great but bring depth in your Business Play.