Albert Einstein is well known as one of the great geniuses of all time.
What most don't know is that Einstein started his career as a patent examiner. For two years he worked at the Swiss Patent Office evaluating patent applications.
During this time, Einstein encountered thousands of entrepreneurs doing the same thing - trying to convey why their ideas were unique and thus should be granted a patent.
To a large extent, this is the same challenge that entrepreneurs have in raising money; convincing investors that their ideas are unique and thus should be worthy of their money.
Interestingly, one of Einstein's most famous quotes provides great value to both the entrepreneur seeking a patent and the entrepreneur seeking funding. This quote is this -- "If you can't explain it simply, you don't understand it..."
Failure to concisely convey a business idea is one of the top reasons why business plans don't get read (if you can't convey your idea concisely in the first paragraph, the reader will most likely stop reading) and why most companies fail to raise money.
However, I would expect many entrepreneurs, particularly those who haven't been able to simply explain their businesses, to disagree with Einstein. And to feel that they really do understand their business.
And to a large extent I agree with those entrepreneurs. Yes, they may understand their business. But, they probably haven't fully thought through their business.
Let me explain. When you properly complete your business plan, you are forced to think through all aspects of your business, and answer questions such as:
* What customer pain are you solving?
* What are customers currently doing to solve that pain?
* What are the strengths and weaknesses of these solutions?
* What is the demographic and/or psychographic profile of your ideal customer?
* Why is your company uniquely qualified to succeed?
Importantly, answering these questions helps you to better understand your business. And thus to create a more concise explanation of it. Which is the point of Einstein's quote, and which is the key to raising money for your business.
So, make sure you have asked and answered all of the key business plan questions. And then, sit down and review your answers and come up with the one line or paragraph that most simply describes your business.