I asked him to tell me in 30 words what the company did and how it would make money. His reply reached more than 100 words before I stopped him. He mentioned the great concept, the cool Web site, the enormous potential, how in love their angel investors were, but he did not clearly tell me exactly what the company did and how it was going to make money.
His explanation was so detailed it was imprecise. All I wanted and needed to know at that time was what the company did and how it would make money.
Why the need for this 30-word explanation? When you go to capital sources, whether banks, venture capitalist or angels, you are one of many who are making presentations. Funding sources do not want to wade through details until you reach the true gem of your idea in the 23rd minute of your presentation or on the page 23 of your documentation.
Your effort could succeed or fail based on your ability to state concisely what your company does or will do. Get to the core of your idea quickly and the capital source will grasp it immediately. It will be evident that you know your business, and that you are probably worth hearing out.
Limiting yourself to 30 words also reduces the need for technical detail. You want funding, not validation or understanding of your technical process. Save the how you will do it until your concept is fully understood, and internalized by your listener.
Try saying to yourself (out loud) in 30 words or less what your company does or will do and how it will make money. If youre like many executives and entrepreneurs, you can probably do this for other companies, but have a very difficult time putting your own operations so succinctly.
I can do General Motors in 21 words: We manufacture and sell vehicles to dealers and fleets, and we put satellites into space for governments entities and private concerns.
How about ABC, CBS or NBC? We sell air time to our customers and broadcast their commercials to our audience. Fifteen words.
I left out some of GMs operations and the networks news bureaus, but you know from each explanation the essence of the companies. If I can do this for GM and the networks, you should be able to do it for your enterprise.
Once you have clearly conveyed the basics of your business plan, you can start to flesh it out, and now you have that 30-word explanation as a terrific tool. I have seen venture fund pros who dont understand some detail brought to full understanding with an explanation of how it relates to the 30-word statement.
Using the network example, the details of a great TV show are important only as they relate to how they will increase my audience so I can charge my advertising customers more money. It really is that basic.
By enforcing a 30-word limit, you focus on what your business plan is. This will be as useful for you as it is for capital sources.
It might take several attempts to get your statement as you wish, but it is well worth the time and effort.
Erwin Bruder (firstname.lastname@example.org) is president of The Gordian Organization, which provides business planning and structuring services to startup and growing companies. Bruder can be reached at (216) 292-2271.