David Cummings on Startups

Common Mistakes in a Business Plan Competition

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David Cummings

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Tonight I had the opportunity to judge the business plan competition for the MBA program at GA Tech (the site is powered by Hannon Hill). Personally, I’m against doing business plans as the time and effort required to do a quality one is better spent on a two page executive summary combined with talking to 50 potential customers. There is value in thinking through the different sections but I’ve never seen a business become successful by doing exactly what they set out to do with their original plan. Unfortunately, too many people start believing what they wrote in the plan and not spending time finding out what the market needs.

Here are the common mistakes we saw tonight while judging the business plan competition:

  • Not clearly articulating the pain or problem being solved
  • Not providing a memorable anecdote or hook for the idea
  • Not painting a clear picture as to what they wanted from the presentation (e.g. a second meeting with investors)
  • Using slides with too many words and too small of a font (the slides were designed as handouts and not for presenting)

Writing and presenting a comprehensive business plan is difficult. The students did a good job, the event was well done, and I was honored to be invited.

What else? What other problems do you commonly see in business plans?

Comments

3 responses to “Common Mistakes in a Business Plan Competition”

  1. Dave Avatar
    Dave

    What about doing both. I am hearing the big dogs want this in addition to the ppt, exec summary and financials. So, here we go, we have decided it is time to do this. I figure it can’t hurt and help provide clear direction for all execs, investors and other key stakeholders involved. I was surprised the importance of this for a big round. Back to the drawing board!

    Reply
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  3. This Wreck Avatar
    This Wreck

    Let’s be honest, when was the last time your read a business plan? I believe investors want to “see” a business plan only to affirm to themselves that you’ve thought it out. Plus, it’s difficult to write flexible business plans, which is needed with start-ups, right?

    Agree with the Executive Summaries and, IMO, it’s important to convey the following:
    1) Why your value proposition is 10x better than the alternative. (2x won’t swing the consumer).
    2) Barrier to entry. Very, very difficult to do. One alternative is the make a compelling argument that your speed to market will bring market share that is hopefully sustainable.
    3) 40% margin or better, at least at the beginning.

    IMO, the most important two:
    4) Mgt team with industry know-how.
    5) Mgt team with start-up experience.

    And contrary to conventional investor wisdom, i believe providing a cheaper price can actually be a great value proposition. Several of us did that when we started the first pre-paid calling card company in the country. We provided a significant savings for foreign travelers coming to the U.S. who needed a convenient way to call back home.

    Reply

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