Failplans Stop Here – Part 3: The Top, er, Bottom, of the Pyramid

This is Part 3 of the “Failplans Stop Here” series.

So now that you’ve suffered through my ramblings about how most business plans suck, and we’ve introduced the fictitious company we’ll be working with in our exercise, it’s time to begin digging into the process of creating our doc set.

I hereby name this methodology the Failplan Avoidance Process (or, FAP, for short — *snicker*). That should be good for at least a handful of comments alone. :)

“5,000 years ago, ancient aliens taught the Egyptians how to write the very first business plan,complete with uncannily accurate cash flow predictions. It’s true! Could they have done this themselves without some form of assistance from advanced technology?  I say no!”

Among other visualizations that you may have in your head, this FAP can best be visualized as an inverted pyramid. Why an inverted pyramid?  Well, to build a traditional pyramid, you start with the base, which is the largest part of the structure – then you build your way up until you complete the apex/top of the pyramid, which is the smallest part.  That approach may have worked well for the Egyptians (or ancient aliens, if that’s your fancy), but it doesn’t work very well for writing business plans, pitch decks, and elevator pitches.

Starting with the largest part (the business plan) and trying to constantly distill the content down into smaller parts (such as the pitch deck, one-pager, or elevator pitch) is an exercise in futility.  This is where many entrepreneurs really run off the rails. Once you start iterating your plan (and the business), that approach proves to be the most difficult in terms of trying to keep all of this stuff in sync.

Also, most business plans, presentations, etc. are going to morph over time – as well they should.  It is human nature to make things “bigger”, and that is exactly what is likely to happen as these things morph.  You start talking to mentors, advisers, and investors to get feedback, and most people just start sticking that stuff in wherever it seems makes sense.

Pages are filled quickly with facts, figures, marketing blurbs, and excerpts from Gartner studies. Then they get on the poop deck of the failboat and try to distill it all down into fast pitch deck or an elevator pitch.  Silly. Next thing you know, you have the next great American novel for a business plan, and a deck that looks like it ate an encyclopedia.  So if you start small to begin with, you’re insulating yourself from pain later. After all, you’re building your product and startup from the ground up – so this should be easy, right? :)

If you flip the pyramid over (a key part of the FAP process – sorry, can’t help it), you start with the smallest part and work your way up from there (again … lol).  Seriously, though, start small – its just easier that way – despite the fact that you really can’t build an inverted pyramid without pissing off the ghost of Isaac Newton.

The Chinese philosopher, Lao Tzu, once said that “a journey of a thousand mile begins with a single step.”  Note, he did not say to take the entire journey in one step.  And neither will we.  Because we don’t want to have a failplan.

FAP Pitch PyramidThis visual is pretty easy to understand.  The higher up you go, the more content, effort, and time go into creating the deliverables.

We’ll start at the bottom and work our way up from there, with each layer building upon the previous. And this is key:

Each step in the process *must* mirror and/or incorporate the output of the previous step. For example, your deal tags will appear in every single level of the pyramid, from the elevator pitch to the business plan. We’ll see other examples of this mirroring later.

Additionally:

Each step in the process *must* be based only upon whatever content is in the previous steps. For example, your elevator pitch should be constructed from your deal tags, not from your business plan. Your fast pitch deck will be based on the deal tags and the elevator pitch, not the formal deck or the business plan. This governance is incredibly critical in order to prevent message dilution, as well as to ensure the right information gets delivered via the right vehicle, and to the right audience.

Here is another way to look at it (click to enlarge):

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The deal tags and elevator pitch serve solely to frame the vision, while the formal pitch deck and business plan serve to frame and describe the business.  The fast pitch deck does a little of both.  You can also see the mirroring here. This is basically a complex clam-shell diagram.  The deal tags are used at every level as an input. And so on.  You’ll also see another aspect of content quantity – there are 10 slides in the formal pitch deck.  Each one of those slides has a corresponding page in the business plan.  That’s it – no more.

Ok, that’s about it for this post. In the next one, we’ll start digging into our deal tags…

Cheers.

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