Regardless of the type of business you’re starting, you need some money. Even if you plan to bootstrap, you still need to raise enough to live on and probably a small amount for operations. Considering that it takes most startups a few years to become profitable, budget for four to five years where you’ll need outside sources of capital.
Business plan competitions are a great way to raise the money that you need to get by. Here are some actionable tips that helped me raise a few hundred dollars in a competition a few weeks ago. I’ll be honest, it wasn’t pretty. But the lessons I learned were worth more than the money.
Have a clear business plan
This is trickier than it sounds, since you need to be able to show that you have a plan but also connect with judges who may not be familiar with your industry. I believed my plan was clear enough, but it definitely left some questions unanswered for the panel reviewing it. Here’s some feedback (which was anonymous) from one of the judges:
“This was kind of a weird plan to read. It is a professional and fairly comprehensive plan for what I only learned through reading appears aimed to be a lifestyle business/passive income generator. Judging it in those terms, I think it sounds great. The world doesn’t need yet another weather website or app, but you seem to have crafted something that can generate some traffic with a relatively low-cost basis and harvest some ad revenue from it. While I don’t think this is typically what this plan competition is about, judged on its own terms, I think this is a good plan. My life advice to you would be to just bank/invest the money from this business while you keep working. The big risk I see, which you can probably mitigate, is if you run into trouble with the sites from which you are scraping the data, as well as getting nudged out in the organic search space. Overall: a solid, if in some ways unambitious plan.”
Major parts of a solid (and ambitious) plan
The above feedback was helpful. It said that the plan was concrete enough to work, but nothing earth shattering or compelling enough that it was worth doing full-time.
My plan included the usual things you’d find in a solid business plan. There was an executive summary, a section about the opportunity, execution, company information and financial plan. The execution section had marketing/sales, operations and important milestones in it.
From a technical standpoint, the plan was fine. All of the feedback reflected that. The biggest issue was not showing enough of an outlook for the future. I got so caught up in explaining technical details of why it would work in the short term that I completely forgot to outline or explain long-term plans.
It’s not that I don’t have them, it’s just that I left that out of the plan because I didn’t feel like it was relevant yet. Make sure that you clearly communicate what you want to build long-term. Even if that vision changes three or four years down the road, having it now will show you have the ambition to build something that lasts.
Illustrate pain points for people
There are a handful of reasons that I think the weather website I built will succeed. The only problem is that I did a terrible job explaining why people might want it. My focus in the plan (and my live pitch) was how much Google and other search engine algorithms will like the website.
Whether the other competitors I was up against were pitching B2B or B2C businesses, all of them focused hard on describing how their companies would relieve pain for individuals. This was in the form of describing unmet needs and other big issues people faced.
Explaining a problem and how it’s solved by your company may be the most important part of a business plan. Even more important, though, is explaining how your business relieves people’s pain.
If I could go back and do it again, my focus would have been on how my site uses text-based ads instead of a display network and how much more people will like that. Google AdSense tends to blast people with full-page ads over a website’s content (something I’ve heard many complaints about).
Have a good pitch deck
I created my pitch deck automatically with the same software I used to put the plan together. As far as I was concerned, it looked fine. Until I saw everyone else’s.
Basically, the software took the most important parts of the business plan and condensed them into about two pages.
What everyone else did better than me was putting together a PowerPoint presentation manually. Even though we all showed roughly the same info, mine was all showing at once and everyone else showed their sections one after another.
Doing that not only helped the flow of their presentation but allowed the judges to focus on one thing at a time rather than being overwhelmed by everything at once.
Consider that when planning your pitch.
Rehearse your pitch … a lot
I think that a lot of founders (including me) have a really clear picture in their head of why and how their business will eventually turn into something big. As I learned, though, condensing that into a smooth pitch that’s only a few minutes can be difficult.
The competition I was in had a 10-minute time limit, so these weren’t just quick elevator pitches. We needed to explain a decent amount about our businesses but be careful not to go too far into one area and neglect others.
I got way too into the weeds on a number of things related to search engine optimization and ended up missing really important details. As much as I hate to admit it, one of the judges even had to ask me how the website would make money.
You need to rehearse your pitch until you know it like the back of your hand. When I walked up to do mine, I had a piece of paper that I planned to read off of. That was because I kept going off on tangents about technical stuff while trying to practice.
Doing that worked about as well as a walk-in cold call. The good news was that I went first, so I didn’t need to get really nervous by hearing all the good, well-rehearsed pitches beforehand.
If you want to start a business, you need money. No two ways about it. Entering and winning a startup competition is a great way to start raising the first few thousand dollars to put toward a new company. Your chances of success will be high if you have a clear and detailed business plan, highlight the right pain points, have a good pitch deck and rehearse that pitch till you’re blue in the face.