And the winner is... Diane Durance, executive director of Great Lakes Entrepreneur's Quest, is here this week to discuss the GLEQ business plan competition for aspiring entrepreneurs. In June, one start-up will win the $100K SmartZone award. In a time when there's talk of taking the nickel out of nickels, a few Gs can mean the difference between boom or bust.
Post 4: Pitching the Business Plan
Posted By: Diane Durance
Posted: 5/16/2010
Start exploring Michigan's entrepreneurial landscape and you'll cross paths with business plan competitions (including GLEQ's) and elevator pitch competitions. They're ubiquitous -- middle schools and high schools, college and universities, business organizations and economic development agencies -- everyone's getting into the act.
I love 'em all -- they give the much-needed incentives (cash prizes, investor face time, free rent, and more!) for entrepreneurs to get off the dime and write a business plan and prepare an investor pitch.
Yeah, okay, but does having a written business plan really matter? Is talking about your business concept important?
Yes. It's just common sense. Many businesses fail. Why wouldn't you want to do everything in your power to increase your odds of success?
Believe it or not -- I've had entrepreneurs tell me that they weren't writing a business plan, because they heard or read somewhere that "investors don't invest based on what they read in the business plan --they invest in the people".
Yeah, that's right... They invest in the people that have A GREAT PLAN.
I think what gets confused in that message is that a solid business plan is "a given" and that investors look for more than the sum of the parts (excellent idea, stellar technology, great market) -- they also need to see that a credible and experienced entrepreneur will be executing the plan. And that brings us full circle...because a credible entrepreneur wouldn't be out selling an idea that isn't thoroughly researched and documented.
Here's what Scott Shane, author of The Illusions of Entrepreneurship - The Costly Myths That Entrepreneurs, Investors, and Policy Makers Live By, discovered after much research:
"Despite the somewhat chaotic beginnings of many new businesses, some approaches are more advisable. The data show that writing a business plan increases the odds that ventures will undertake other organizing activities and product development, as well as continue in business. Completing a business plan also increases the pace of initiating product development, obtaining inputs, starting marketing, talking to customers, and asking for external funds."
If you're starting a business, you need a business plan. A written-down business plan. Period.
Equally important is your ability to articulate the business concept concisely, convincingly -- and very quickly. Hence the term 'elevator pitch.' If you have the attention of a prospective investor, customer or strategic partner, can you convey key information in a minute or two -- the time you have riding an elevator together or waiting in line at a coffee shop? It's not easy, it takes practice.
Practice presenting your business in 30 seconds, two minutes, and -- for when you get really lucky and they'll give you more time -- ten minutes. What you say to an investor will be different than what you say to a prospective customer, so prepare and practice pitches for both.
You don't have to join competitions and you may never show your business plan to an investor, but doing the work is essential. Statistics show people who write down their goals have an 80% higher success rate of achieving them. The business plan is the equivalent of writing down the goals for your business.
Just a couple more thoughts:
You can get help writing a business plan through the Michigan Small Business Technology and Development Centers. Check out their calendar of workshops and seminars here. Consider entering your plan in the GLEQ Business Plan Competition this fall. You'll be offered a business coach for advice and support during the competition.
Now, I'll leave you with these inspiring quotes:
"People with goals succeed because they know where they are going. It's as simple as that." -Earl Nightingale
"Our goals can only be reached though a vehicle of a plan, in which we must fervently believe. and upon which we must vigorously act. There is no other route to success."
-Vincent van Gogh