Here’s a great idea about how you should present your business data to investors, prospects, or even just Mom: forget the billions. In a recent article, author and business plan expert Tim Berry explains that these numbers and this top-down approach just don’t mean anything to anyone.
“As an investor, as a business plan contest judge, or as a teacher, I don’t really care how many billions of dollars are spent on this or that or the next thing when I’m reading a business plan. That number is too big. It tells me nothing.”
He explains that what really matters, and what most of us can easily get our arms (and brains) around are the simple numbers; the granularity. For a web-based business, figure out what it will cost to get a single visitor to the site and how you’ll do it. If you’re a restaurant, tell me how you’ll fill those seats on opening night and what you’ll make from each customer. If you’re the government trying to sell me a new healthcare plan, put it in terms of cost per doctor’s visit or an average monthly premium. Then you can build forecasts from these details up into the larger numbers.
Especially for those companies in the business-plan-writing stages, this can be invaluable. Berry says, “I know that I’m in the majority, among people who read business plans, in really disliking the top-down, billions and billions kind of forecasts. When they start talking about getting only a very small percentage of an enormous market, they lose me. Those huge markets don’t split down into millions of pieces.”