If you have been going through the business plan in order, you have now defined a market and its limits, and described what it is like. You have placed it within a value chain, and shown how the value chain functions as a series of markets working together. In other words, you have set the scene.
Now, tell the investor what is wrong with that scene. There is a problem in the market you have chosen that you are going to fix- what is that problem? A user journey or a product journey (which should be mirror images of one another) is often a useful way to do this clearly.
Getting the investors to understand why the problem exists is one of the most useful challenges to solve. Once they do, they will be able to place your proposed solution into that product or user journey, which fits into the market you’ve mapped for them, and make a clear determination as to whether they think there is something worth solving here.
Some of the key questions to address are:
- What is causing the market flaw?
- Is it a core resource that is missing, and if so, what?
- Why are customers putting up with the situation?
- How much would they save, and pay, for your solution?
You will talk in detail about competitors later, but for now it is a good idea to briefly explain why no competitors have solved the market flaw.
“The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.”
-George Bernard Shaw
Having identified the problem, explain what the entire theoretical solution would be, and then which bit of that you are proposing to resolve. State your proposed solution as a proportion of the whole, as a series of user or product journeys, or as any combination of descriptions.
Facebook, for example, wanted to connect people with similar interests who didn’t know each other. At first, it solved the online part of that- it didn’t help people meet physically. With the ability to “check in” to locations, it moved across to solve the other part of the connection problem.
Finally, explain the effects of your solution on the bigger picture, for a sanity check. Within the market you are targeting, what has changed and who are the winners and losers? How has this affected the value chain and are new links being formed between different stages within it? And most importantly, given the amount of money you are asking for and the resources you can muster, is this credible?