plura Financial Blog

blog for plurafinancial.com, an online matchmaker between banks & small businesses

How to Win a Business Plan Competition

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Several people have asked me about the process and lessons learned from our success in national business plan competitions…here are my takeaways:

1)      Be passionate.  I’ve seen a lot of brilliant ideas pitched by brilliant people that absolutely put the judges to sleep.  A successful VC once told me that judges want to know that that an entrepreneur has  enough passion that he will find a way to be successful, or die trying.

2)      Give the judges an analogy.  Make sure the judges understand your business from the beginning.  Don’t just tell them what it is, but also tell them what “it’s like” through analogies.  For example, we say we’re like lendingtree.com but for small business loans.  This works well for us, but just be sure you have an analogy that works for you.  Rule of thumb : try it on your mom.

3)      Have a good reason for your business to exist.  This is something that I learned in my career as an underwriter, but is even more important when it comes to venture capital pitches and business plan competitions.  Solve a big problem or help someone get a job done…otherwise, the judges will pick your business apart.

4)      Define your market size, the bigger the better.

5)      Include a go-to-market strategy (illustrate how you will penetrate the market).  Don’t give a canned answer (SEO, magazines, radio, etc.)…have a creative way to attract customers.

6)      Be a compelling equity investment.  This is also known as the “Investment Rationale” slide.  To start, build a bottoms-up financial projection model and calculate an IRR for investors.  Be prepared to defend every assumption of your projections.  I cannot emphasize this enough.  Include a breakeven analysis. Make sure the judges fully and clearly understand how you’re going to make money.  Include the IRR, but do not focus on the IRR (focus on profit drivers).

7)      Calculate your cost to acquire each customer.  We got in trouble with this one, as we don’t think internet businesses like ours are as easy to calculate as some other businesses; wrong answer.  Some judges are hell-bent on this metric.  If click through rates are part of your pitch, be sure to also justify the “conversion ratios” built into your assumptions.

8)      Beware of trap questions.  Many judges in these competitions are like lawyers…they love to bait and trap you with their questions.  For example, a judge might say…”so you’re an ASP model, right?” or “so you’re just a lead generation business, right?”.  It’s tempting to say, “yes, you’re right”…problem is that this is a classic trap.  If you agree wholly to this assumption than you put your business in a defined little box, giving the judge ammo to shoot your business plan down, without leaving yourself any “outs”.  Unfortunately, the best way to answer these traps would be similar to what a politician does…don’t answer it, dodge it, and thank the judge for their good question.  Make no mistake, I hate this.  I like answering questions with an answer, but unfortunately judges love setting traps and those that don’t leave themselves an out will get killed by the judges.

9)      Know your competitors – existing and potential.  Even if your business doesn’t have competitors, it will.  Do not ever try to tell the judges you don’t have competitors because they will (i) assume you haven’t don’t your homework, and (ii) pick you apart.  Build a chart that shows your existing and potential competitors, and measure them across a 2D chart based upon points of parity and points of differentiation.  For example, we measure our competitors based upon ability to generate leads and the ability to increase efficiency for customers.  Know your customers, find out their strengths and weaknesses, and demonstrate why you’re building a better mouse trap then they could.

10)   KISS it.  Keep It Simple Stupid.  Make the slideshow aesthetically pleasing, don’t litter with lots of words because the judges will be trying to read the slide, and will get annoyed that you’re talking while they’re trying to read.  Demonstrate the business is the right horse and that management is the right jockey, but don’t try to fit in too much into the pitch.  Save it for the Q&A.  Business Plan competition winners and losers are made in the Q&A session – if you can anticipate all the questions and answer them concisely you’re chances of victory will go up exponentially.  In other words, you don’t need to talk about every aspect of your business in the core pitch, it’s beneficial to save some ammo for the Q&A session in my opinion.

There are tons of books and blogs that probably provide better guidance to winning business plan competitions, but these 10 takeaways are what I’ve seen to be the key factors to success.  In summary, demonstrate you’ve built the right horse, you are the right jockey, and that you’re solving a big problem.  If you can do that, and if you can anticipate the questions in the Q&A, you’ll do well in any business plan competition.

pluraFinancial won Runner-Up in the 2010 DFJ-Cisco Global Business Plan Competition and won the Citi Foundation Business Plan Competition in Chicago in 2011.  For further information, contact Brandon Hinkle at bhinkle@plurafinancial.com. Brandon is the Co-Founder and CEO of www.plurafinancial.com, a free online matchmaker between banks and small businesses seeking debt financing.

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