I was recently asked to be a judge for Pitch Dingman, where students at the University of Maryland pitch their business ideas. It was an honor and I was more than a little impressed. Besides the ideas being beyond brilliant, one thing every presentation had is what every business plan should also contain.
I’m a big proponent of short business plans. I think the tomes that run on for 40 + pages are an exercise in futility. As an entrepreneur it might make you feel smart, but no one is going to read it. These kids had exactly 6 minutes to pitch and they managed to cover all these essential components:
1. Executive Summary. Each pitch provided a very short high-level overview of their business idea. When putting your plan to paper, this section should never be more than 2 pages and should contain all the salient points of your business.
2. Market Analysis. Some students did this better than others, but all contained the market potential for their product, the competitive landscape and how they were different. If you can’t articulate the size of the market you’re entering, it’s difficult to get investors or bankers interested.
3. Marketing Strategy. Now that you’ve told me what you do, how are others going to find out about you? Are you going to advertise, license your product, or start locally before expanding? By developing your marketing strategy your forced to identify your customer. This may change over time, but you need to know it in the beginning.
4. Financials. If you’re an existing business, even if it’s a year or less, you need to include actual results and at least 2 years of projections. For a startup, completing projections is a good way to force you to really think about your revenue sources and all of your expenses. Be as realistic as possible. Showing exaggerated revenue and profits undermines your credibility.
5. Bios and background. Make sure you include the experience of the management team. If you’re missing a key person, explain your plans to fill the void. With any company, especially a startup, investors are buying your expertise as much as your idea. They want to know if you have the ability to execute.
A business plan isn't a static document. And whether you need to raise money or not, a business plan forces you to really think about the elements you need to be successful. Your plan will likely change many times as you encounter new opportunities and challenges.But as I mentioned, it doesn’t need to be long. You can likely complete all the information above in less than 10 power point pages. After all, the students at PitchDingman managed to communicate all this information in 6 minutes or less.
Going forward, I’m going to go back to some of my finance roots and write more pieces for business owners and entrepreneurs. Please send me any ideas you’d like to see.