It’s not exactly the same as the chicken or the egg, but it has some similarities.
I get this question a lot lately, so I decided to take it here to my blog.
Don’t pitch a business without planning it first. That’s a lot like trying to film a movie without having a screenplay. You have to know what’s going to happen before you start.
And I do see people, websites, even some smart people and good websites, confusing the issue by presenting a pitch as if it were something you could do without having a plan. Sorry, bad idea.
Yes, you can summarize a business idea without detail. You can summarize a strategy. Maybe you can put up a picture of a business model, and focus on a target market, and narrow the business offering. And that’s certainly a useful exercise. But it’s just a concept piece, a rough sketch.
Before you have a pitch you simply must have a rough idea of estimated startup costs, sales, expenses, and cash flow. Without that you can’t possibly talk about scale, financial vital statistics, and feasibility. It’ s not that you accurately predict the future. It’s that without those basic numbers you really don’t know what the business is. They’re wrong, but they’re vital. They pull apart the relationship between sales, spending, profits, investment, and strategy. How many employees are needed? How much space? What kind of space? Does the marketing strategy match the target market and the focused business offering?
You should never, ever put a pitch in front of investors or bankers or bosses without having a plan behind it. Just ask yourself the questions your target audience will ask. Do you want to say “I don’t know” or “we haven’t figured that out yet?” Or would you rather say what your plan says.
And of course your plan will be a living, constantly changing plan. But don’t confuse flexibility with not having a plan. Flexibility is having a plan so you know how changing one assumption or variable effects all the others.
Special reminder: maybe a lot of the confusion is caused by people who think you don’t have a plan unless you have a full formal business plan document, coil bound, edited, printed, and mounted on a pedestal. Not so. Having a plan means milestones, basic numbers, task responsibilities, review schedules, and listed assumptions.
Final thought: my favorite process is having the plan — the real plan, not the formal output document plan — and working it interactively with the pitch. It has to do with the way we humans think. Summarizing something (the pitch) often sharpens the focus, and generates new ideas. Plan and pitch, interactively, working them both. And expect them to change almost daily. That’s life in the real world.
Which, by the way, is what I say in The Plan-As-You-Go Business Plan. (Sorry, I couldn’t resist).
(Image credits: Veranis, Archman/Shutterstock)