Lise Buyer has been a top-ranked technology analyst in the Credit Suisse First Boston Technology Group, a venture capitalist with Technology Partners, and, more recently, a member of Google’s IPO Committee. As a result, she has had the chance to see more than her share of business plans.
Like many venture capitalists, she concentrates on four key areas in evaluating startups:

• Is the market opportunity large?
• Is the business/technology defendable?
• Does the business model work?
• Is the team in place to execute?

As Lise points out,

Virtually every business plan attempts to address these questions (with varying degrees of success), but many plans contain a fatal flaw in logic: By simply identifying a large market and estimating an attractive set of sales and market share figures, the business plan’s architects ignore the intensity of potential customers’ motivation to try something new (and take a chance on a new company). While everyone in an industry may have the same problem—which could be solved by the new venture’s product or service idea—the problem may just not be big enough or important enough to be a priority for firms in the target market.

The argument that this is a big industry and we’ll sell them ‘stuff’ is the wrong approach—the solution has to solve a major point of pain.

Buyer suggests that the would-be entrepreneur consider the following question:
If a purchasing manager has 50 purchase orders on his or her desk, what is it that will make [the manager] sign yours? Often, the entrepreneur’s technology approach is sound, but the opportunity to solve a major problem simply lies in a different market or application.

Identifying points of pain is a key sales and marketing activity in the information technology sector for firms of all size. Many software firms include “pain sheets” as part of their standard sales tool kits, in order to help technology salespeople zero in on these opportunities and emphasize them to potential buyers.

From Hunter or Hunted - Chapter 3