Business Plan Competition Guide to Success By: Adam Hoeksema Business plan competitions are big business for startups these days. A 2009 McKinsey & Company report found that total funds from prizes have more than tripled over the past decade and now surpass $375 million. So what does it take to win a business plan competition? There are typically three stages in a business plan competition. 1. Preliminary Round - Typically applicants will submit a business plan executive summary 2. Business Plan Round - Applicants will now submit a full business plan 3. Presentation Round - Finalists will typically present to a panel of judges The following guide will outline keys to success in each round of a business plan competition. Round 1 - Executive Summary Round Since the Executive Summary is typically the first round I will start there. Famous venture capitalist Guy Kawasaki said in his book, The Art of the Start, "Of the effort you put into write a business plan, 80 percent should go into the executive summary. These are the most important paragraphs of your organization's existence." If your executive summary is the most important paragraphs of your organization’s existence, then your executive summary must be incredibly important in a business plan competition. The typical executive summary will be composed of the following sections: The Grab Big Problem Unique Solution Market Potential Unique Selling Proposition Management Team Financial Projections Request The Grab - This section does not actually have a title, but it is probably the most important part of your entire executive summary. In two or three sentences you should tell the reader why your business is special. Maybe you just struck a deal with Wal-Mart to distribute your products in one of their stores on a test basis. Maybe you just signed a partnership with Google. Maybe you were just awarded a patent, or maybe you just made your first big sale. Whatever it may be, ask yourself "so what." Could a judge reading your executive summary legitimately say, "so what?" If so, then you didn't do an adequate job. Obviously if you just signed a partnership agreement with Google no one would say "so what" so grab their attention. Big Problem - The first ingredient of a good business idea is a Big Problem, so explain the Big Problem that your product addresses. For instance, there is too much traffic in Chicago and everyone hates traffic. Everyone in the room should be saying "yeah I hate that." Unique Solution - The big problem is the easy part. Now you have to convince the reader that you have come up with a unique solution to the big problem. If you have these two ingredients you have a good business idea. Maybe you developed a new traffic control system that will save one minute for every person in Chicago each day during their commute. One minute each day is valuable when you are talking about a couple million people. Market Potential - Elaborate on the big problem by providing stats for your industry. How much is spent annually on similar products or services and how fast is it growing. Maybe you operate an in-home health care company. With all of the health concerns brought about by aging Baby Boomers, you have a large market potential with a rapidly growing market. Unique Selling Proposition - This is where you elaborate on your unique solution. What specifically gives your product or service an advantage over the competition? Maybe your home health care service actually sends doctors to the home instead of just nurse practitioners, or maybe you guarantee same day visits so that you don't have to schedule ahead of time. Just point out why you are special. Management Team - Depending on what industry you are in, this can be one of the most important parts of your executive summary. Regardless, your investors or bankers are putting trust in the team, not the idea. Ideas are easy to come by, but executing on those ideas can only be accomplished through a strong team. Quickly show why your team has the experience and knowledge to execute your business plan. Financial Projections - Based on your market, your business model, and your historical performance, you need to develop a bottom-up financial forecast. If your plan is for a group of investors, don't spend too much time on this section because they know that you have no idea how much money you might make. Investors typically won't make a go / no-go decision based on your financial projections. They will essentially make their own financial projections. That being said, you should have some sort of graph or table with current sales and projected sales going forward for at least three years. Request - Typically you will request a loan or investment at the end of an executive summary, but since this is a business plan competition that may not be applicable. Use your best judgment with this section, but don't use it to summarize your executive summary! You don't need to repeat yourself, instead maybe you could leave the reader with an intriguing and compelling opportunity for your business. You want them to pass you to the next round, so give them a reason to pass you on to the business plan stage. Remember Your Audience Not only do you need to consider each section of your executive summary, you must also consider your audience when writing your executive summary. Business plan competitions are difficult because a good competition organizer will bring together judges from varying backgrounds, ages, genders etc. This will probably keep you from targeting your executive summary toward one group of people, instead you have to take what you have been given. Most competitions will have a set of guidelines. They may even publish a judging criteria for you so that you know what aspects to focus on. If they provide you these details you should start there because you can rest assured that there will always be a few people on the judging panel that will go down the published judging criteria list and score you directly according to the criteria . There is no sense in costing yourself points before you even start because you did not follow the judging outline. You should also understand that many of the judges will probably throw the criteria out the window and judge based on their own perceptions. You need to spice up your executive summary in a business plan competition - especially if they provide a specific criteria for judging. How can you ensure that your executive summary stands out in a business plan competition? 1. Quotes from Experts 2. Disclosure of Client Lists 3. Disclosure of other Credible Investors Quotes from industry experts can give your business credibility. Maybe you are developing a medical device to assist the elderly in getting in and out of bed, and you have a quote from a distinguished doctor or maybe the CEO of a large nursing home chain that gives credibility to your claim that there is a need for this type of device. Listing a major client or a couple of well-known clients in your industry is also a great way to stand out. Using a medical device example, maybe you have developed a prototype that a nursing home chain with 10,000 beds is currently using on a test basis for just a few of their residents. Again, disclosing this client gives your product or service credibility in the eyes of the judges and will immediately ease concerns they may have had. Finally, if you already have acquired an investor or investors for your business, the judges will look at the plan with a more positive outlook simply because someone else believed in you enough to hand over some cash. I did say credible investor though, so if you say that your rich uncle in California gave you $15,000 to develop your prototype, that is almost meaningless. However, if a wealthy doctor that works with the elderly gave you $15,000 to develop a prototype, now you are starting to raise some eyebrows. Round 2 - Business Plan Round There are literally thousands and thousands of guides, templates, examples, articles, and videos on how to write a business plan, so I am simply going to point you in the direction of a couple of the best resources. http://www.bizplanit.com/ http://www.bplans.com http://www.sba.gov/smallbusinessplanner/plan/writeabusinessplan/index.html Use these 3 resources to write your business plan, and just keep this one tip in mind. Most business plan competition judges will judge numerous business plans. Write your business plan to be exciting enough and visually appealing enough to grab and hold the attention of a judge who has already read 5 other business plans that day. Round 3 - Presentation Round The last stage of most business plan competitions will be a presentation round. This is difficult because every competition will have a different time requirement for the presentation. Some competitions will give you 5 minutes while others may give you half an hour. Again based on your unique business plan competition you may have to make some changes to the outline below. Your presentation will probably be built in a similar fashion to your executive summary. Here are the 10 slides that you should build your presentation around: Title - Just include your organization name, your name and contact information. Don't read this to the audience. Start off by telling them what your organization does in no more than 2 sentences. Big Problem - What is the big problem or pain that your organization addresses? Get the audience to recognize the pain with this slide and then provide them with your solution on the next slide. Unique Solution - After you have the audience nodding their head and talking amongst themselves with comments like, "Yeah I hate it when that happens". Now it is time to reveal your unique solution to this problem. Business Model - We could alleviate a lot of problems if money was not an issue, but unfortunately it is, so now explain how you are going to make money with your unique solution to the big problem. Unique Selling Proposition - What makes your product or service special? If you are a online marketing firm, how are you any better than the 1 million other online marketing firms? Competition - Thoroughly explain your competition. Acknowledge their strengths, but you can also point out their weaknesses and where you hope to capitalize on their weaknesses. Never Never say that you have no competition. Even if no one else makes your product, what would keep someone from buying your product? That is your competition. Marketing Plan - How are you going to find customers? How are you going to convince them to take money out of their wallet and put it in yours? Financial Projections - Either a 3 or 5 year forecast is best. Give it your best shot on these, but don't waste too much time. What I have learned is that smart investors know that you have no idea what kind of money you will make so they essentially disregard your projections and make their own estimates based on everything else you have already told them. Management Team - Teams are important because no one can build Google or Microsoft by themselves. You need team members that can make up for your weaknesses and vice versa. Focus your audience on your teams strengths as they will be what drives your success. The Ask - Now it is time to ask for the funding you need. Don't ask for more than you need. Don't ask for less than you need. Explain major milestones for your organization as well as an expected timeline so that investors have an idea regarding the length of investment. If you can communicate these ten areas in a clear and effective way you will be on your way toward winning your first business plan competition. Your presentation round will probably conclude with a question and answer period. I only have one suggestion here. Tell the truth. When the judges are grilling you with questions you don’t know the answers to. Don’t try make something up on the spur of the moment. If you don’t know the answer to that question, then tell it like is. Just let the judges know that you have not considered that before. Where to Find Business Plan Competitions Finally, I want to point out a couple of great resources for you if you are interested in entering a business plan competition: www.bizplancompetitions.com - Find all the legitimate business plan competitions throughout the United States. This website provides a wonderful calendar that notes all of the competition deadlines. istart.org - This is a new site that actually allows business plan competition administrators to organize and run the competition through the tools provided on the website. Additionally, you can find business plans from various competitions around the world and discover businesses that may be looking for investment. Best of luck in your business plan competition endeavours! Sincerely, Adam Hoeksema CEO & Founder - ExecutivePlan www.theexecutiveplan.com
"Business Plan Competition Guide to Success"