Could you be setting up your business plan for failure?

David E. Gumpert, author of Burn Your Business Plan, often tells the story of how he and his partner failed to raise money after submitting their business plan to venture capitalists and meeting with several others for presentations. Disappointed by the fruits of their labor, they considered resigning from their company in 1995. Fortunately, on the advice of their advisory board, they opted to divert their time from massaging the business plan to making sales. Funding, they were told, would come later.

It turns out that they sold enough to stay afloat until 1996. In 1997, sales didn’t grow as fast as they had hoped, so they decided to seek financing again. This time, they hoped that positive results would be easier to come by, after all, they were now pretty well established. However, the board told them to go out and promote their business and increase sales.

If at first you do not succeed…

Instead, Gumpert and his partner decided to dust off their old business plan, spend many hours rewriting and updating the plan, and go out once more to seek financing. And, once again, they were rejected. How could this be? In the late 1990s, it seemed like every Internet-related start-up in the world was getting funding. In fact, according to the MoneyTree Survey, sponsored by Price Waterhouse Coopers, Venture Economics, and the National Venture Capital Association, the amount of venture capital ($7.7 billion in 1995) had risen to $16.4 billion by 1997.

However, the failed financing left Gumpert and his partner with two difficult choices at this stage: find ways to grow the business without financing, or leave it. They took the first option. They’ve also hired public relations professionals and gotten several of their most successful corporate clients featured in business and industry trade publications, citing their agency as the key force behind their clients’ success. This ad sent the agency’s phones ringing with new leads, several of which turned into additional sales.

As the business grew, they remained vigilant about controlling their expenses and aggressively collecting accounts receivable. By 1999, they were operating profitably with $2 million in annual revenue, with nearly 20 employees. Additionally, the amount of venture capital being invested nationally has skyrocketed to a staggering $55.5 billion. But Gumpert and his partner paid little attention to this; their interest in external financing had diminished significantly. (By the year 2000, the availability of venture capital peaked at $85.5 billion.)

The power of advertising

As Gumpert and his partner continued their success in 1998 and 1999, their promotional efforts eventually drew the attention of a public company seeking their expertise in developing and managing online content. In December 1999 this company acquired Gumpert’s company, NetMarquee. To Gumpert’s surprise, the acquirer never asked to see his business plan; he just wanted to see his financial projections under several different scenarios.

Recounting his financial experience, Gumpert makes two points: First, even in good times, the venture capital route is closed to the vast majority of companies that seek it. While it might have seemed back then that almost every company that applied was receiving venture capital, the reality is that venture capitalists reject the most carefully crafted business plans. Second, he’ll be amazed at what he can accomplish without the funding he believes he so desperately needs to avoid failure.

The truth is that a business plan alone is unlikely to generate funding unless it is part of an overall marketing strategy.

Four tools to help market your business plan to investors

Famed motivational speaker Jim Rohn says there are three steps to successful communication: “Have something nice to say, say it well, and say it often.” These three steps form the basis of the Business Plan Secrets Revealed manual. They are essential for marketing your business plan with the intention of attracting investors and selling your business plan to them. Here are four tools to help you “say it often” so you can attract investors and sell them on your business plan.

One, a concise, well-written twenty-five page business memo or “business plan” that builds a case for separating your company from your competition. You don’t need a two-inch-thick business plan. Such long plans are often aimless; Instead of building a case that leads investors to decide if the business is the right investment for them, they “shoot” in the hope that some of the shots will take effect.

Two, an effective elevator pitch, a 60-second direct verbal pitch to your business, that communicates to your customers and investors what you do in an exciting and engaging way. The ability to separate your business from your competitors and gain investor interest in the short time it takes to ride an elevator is critical.

Three, an investor relations website to build credibility and help investors quickly get the information they need, when they need it. Of all the available media, the Web is particularly important. It’s fast and available 24/7. With it, you can capture leads and automatically stay in touch with those who are interested in your business.

Finally, press releases to help you get the word out. A press release is the basic tool to capture the attention of the media. The public’s desire for interesting and relevant news remains strong, as does the importance of carefully selecting relevant target audiences. You are dealing with much more skepticism from the public now than in the past, which makes evidence and objectivity in your press release paramount.

The process of raising money and attracting investors is not easy. If it were, all business ideas would be funded. You need to use all the tools that are available to you and start to view this process as a marketing process backed by solid verifiable evidence. It is simply not known when the plums (investors, on the tree) will ripen, ready to invest. But, you do know that if you do everything you can to care for the tree (water it, fertilize it, etc.), it will eventually bear fruit: you will raise money for your business.