In the course of over the past 10 weeks I’ve been tearing apart 10 pitch decks as part of our Pitch Deck Teardown series. All decks had their own strengths and weaknesses, but there was one glaring omission from most of the decks I’ve reviewed: an operational plan. Leave it out of your deck power Forgivable if you have an attachment or a more detailed financial plan, but they are often too detailed. Here’s an overview of why you need one – and how to make one.
In short, an operational plan is a high-level numerical picture of the near future of your company. It describes in measurable terms what you need to do to get from where you are now to where you need to be to pick up your next round of funding. And it presents this information in a way that’s easy to digest and discuss, without getting bogged down in the core numbers.
Why you should tell your story in numbers
When you’re raising money for your business, chances are you’re trying to convince a venture capital firm to give you money. On Twitter, VCs like to portray themselves as the cool kids around, but don’t listen to them. Venture capitalists work in the financial services industry just like the rest of the bankers and capitalists, which means they are obligated to their own investors. Fiduciary responsibility is a crucial aspect of venture capital; they will never raise another fund unless they understand the financial machinations that go on under the hood of their own company, their fund and the startups they invest in. All this means: money is the alpha and the omega of entrepreneurial capital, and to raise money successfully, you need to be able to speak that language.
When you weave a compelling story into numbers, you speak the language of venture capital. Numbers are king. Haje Jan Kamps
If you’re raising money, you’re essentially painting a picture for your investors: If you give me X dollars, I’ll move my business from where it is now to a position where it’s worth a lot more money. To do that, I’m going to change certain aspects of my business. Those aspects can be staffing (you hire more people to build a better product), it can be a product (if we build features A, B, and C, we can sell this product), or it can build traction ( we go from 2,000 paying users to 25,000).
None of this should be new to you; as a founder, this is the bread and butter of your work. So your business plan is how you tell your story, not in words, but in numbers. That’s crucial. When you weave a compelling story into numbers, you speak the language of venture capital. Numbers are king.
So let’s discuss what should be in your business plan, how to present it, and how to check for inconsistencies in the plan.