SMU Business Plan Competition Tomorrow
February 14, 2008
Southern Methodist University Cox School of Business is holding a Business Plan Competition for MBA students. I’ll be tied up for most of the afternoon serving as one of the judges. I actually spent a couple of hours reading each of the plans (still need to fill out the evaluation forms). My question, ‘do entrepreneurs still write business plans?’ The last business plan I wrote was for LayerOne ~ I think I wrote 100 different versions of the darned document. I have no idea how many investors read past the executive summary, but I suspect I could count them on one hand.
Babson College conducted a study that found ‘no statistical difference in success between those businesses started with formal written plans and those without them…’ Of course, as Guy Kawasaki points out, “Most venture capitalists require a business plan as part of due diligence. This doesn’t mean they spend more than ten minutes reading the plan, and it certainly doesn’t mean that they believe it.” David Cowan of Bessemer Venture Partners famously said, “Nothing slows down a VC as much as a comprehensive business plan.” Guy has several very good suggestions for your plan:
- Perfect your pitch, then write your plan.
- Use the business-plan exercise as a way to get your team on the same page.
- Keep it short: ten to twenty pages.
- Spend no more than two weeks writing it.
- Don’t get obsessed with with details in your financial forecast because it should be one page long.
Nivi’s Venture Hacks suggests,
Don’t send a 50-page business plan to investors. Nobody reads them and nobody executes them. Investors who want a long plan look bad—so do companies that generate them. The milestones slide of your deck summarizes the company’s plan for the next 1-3 quarters. Document your detailed plans on a napkin, wiki, spreadsheet, deck, to-do list, or whatever. Share it with investors sometime around your second meeting and make sure they generally agree with your plan. But don’t send investors a 50-page sales pitch that you call a business plan—an elevator pitch and deck are sufficient. You don’t need an executive summary either—an elevator pitch and deck are sufficient.
