You’ve got a great business idea, so now all you need is a great pitch, right? No need to spend time on a business plan, just put together a few slides and a five to ten minute speech and investors will be throwing money at you.

Think again.

A great pitch is important, everyone agrees on that. But with the current trend of startup “experts” saying that business plans are obsolete, the following reminder is necessary:

A pitch without a plan is a bad idea.

Nobody is saying that you should write and print a 30 page business plan document detailing everything that ever might happen in your business. But the act of planning the business will not only better prepare you for actually running the business, it’ll better prepare you to pitch the business successfully.

Think about the content of the pitch and what potential investors are going to want to know. Even if you’re literally pitching your idea in an elevator, you’ll need to talk about your product or service, your team, your market, financial projections, how much investment you’re looking for and how the money will be used (and repayed), and more. If an investor is even remotely interested in your business, they’ll likely have questions, so you’ll need to be ready to back up your pitch with solid research and even more numbers.

Maybe it’s semantics, but if you don’t do any kind of business plan, where do you get all that information? In Pitching Your Business vs. Planning Your Business on Forbes.com, Sabrina Parsons says:

“How in the world can you pitch, and how in the world can you know what to pitch, if you don’t do all the research involved in a plan? Everything you need to include in a pitch deck comes from the research and financials you would do if you were writing a plan.”

Parsons goes on to discuss the ways planning supports the pitch, and uses specific cash flow examples to show how planning continues to pay dividends to companies who embrace it.

In the end, it’s clear the question isn’t really whether or not you need a business plan. If you haven’t been asked for a formal printed document, then maybe you don’t need to create one. But you do still need to spend the time planning your business, thinking through the scenarios and variables you may face, and arming yourself with as much knowledge about your business as possible. Your investors will be able tell that you actually know what you’re talking about, and ultimately the success of your business may depend on it.

Pitcher image courtesy of Shutterstock

I’m writing this in the airport on my way to Austin, TX., where I’m going to be a judge at the University of Texas Venture Labs global business plan competition (used to be Mootcorp). Between contests like this one and angel investment, I’ve heard two dozen or so business pitches lately. I’m talking about the 10-20 minute slide presentations and accompanying questions and answers.

1. Boring. And just so you understand, market need and solutions aren’t boring, especially when you show them in stories rather than alleged facts. Tell me a story that resonates. Tell me about people who care, ideas, how you started, why you started, and how you’re going to change the world. And please give me financial projections with assumptions laid out clearly, that’s not boring at all. Your business is exciting. Your prospects are exciting. Don’t dry it all up. Talk about it. With interesting pictures to back your stories up. Put faces on the screen when you’re talking about people. Read Resonate (better yet, get the new iBook version, which is sensational), or Presentation Zen, or just at least the blog post Really Bad Powerpoint. Or listen to The Art of the Pitch.
2. Slides full of words. You say the words, talk to me, don’t have us all reading the slides together with you. That goes back to point 1 above, boring. You talk and show pictures. See point 1.
3. Reading those slides full of words. Never turn your face to your slides and read us the bullet points. That makes all of us listeners want to throw something at you. Point 1 again.
4. Buzzwords. Why is it that every single plan is disruptive? Can they all be? Don’t use the same words that everybody else uses. I don’t mind the technical jargon and buzzwords as much because people know they have to explain them. I mind all these trendy buzzwords that everybody applies. Not just disruptive, but market-leading, and viral, and pivot. They remind me of the old days when every software package claimed to be user friendly (and mine was the only one that really was).
5. Internal rates of return and net present value. I’m glad they taught you that in business school. But both of those calculations are based on five years (or so) of future cash flows. Show me your projections, yes, and, even better, show me the assumptions behind them. But don’t quote me a damned IRR. I’ll judge your projections for realism and credibility, but that’s sales, costs, expenses, cash flow, and other basic numbers. Not discounted cash flow.
6. Big market “facts.” I hate hearing about a $43 billion market, and even more so when you present a sales forecast validated by getting some percentage of that market. Validate sales by bottoms-up assumptions.
7. Bluster. Know what you don’t know. Don’t bluff investors.
8. Blaming. “Yeah, these numbers are probably wrong. Our financial person did them but we’re going to change financial persons.” What? Yes, I did hear that in a presentation once.
9. Adjectives. Great, easy, simple, powerful, disruptive … tell me the story of what you have, where you are, how you got there, who’s it for … let me decide the adjectives.
10. Bored co-presenters. When more than one person presents, the others have to act interested. Sure, you’ve heard the pitch many, many times, but if it bores you then that makes me less interested.

New businesses are fascinating. The new ideas, creating new markets, really smart people, that’s all fascinating. So step up your pitch.

(Image: courtesy of University of Texas Venture Labs global competition site)

Consider yourself one of the first to know about the new Bplans.com pitch site at pitch.bplans.com. That means you can be one of the first to pitch and one of the first to get posted.

No, it’s not about putting your business in front of investors, although maybe it could be partly related to that. Instead, it’s about the art of the pitch. Free publicity perhaps, too, and tips or comments. What it is about is the art of the pitch. Doing it right, doing it well and getting yourself and your business up and showing up. (And let’s pause here to note that The Art of the Pitch is a chapter in Guy Kawasaki’s The Art of the Start book. Click here for his reading of that chapter.)

Take your browser to pitch.bplans.com and you’ll see the “Add pitch” button you can use to upload your pitch. What follows is a page of basic information (name, address, logo, etc.) and then a second page where you can add a YouTube video URL if you want, or short texts to deal with 10 key topics.

This is all free to the users. What do you get out of it? A dedicated URL you can use to refer people to your business summary, plus the possibility of comments; this is free publicity, and publicity is assumed to be good. What do we get out of it? Bplans.com is about starting, growing and planning a business, so we get more interesting stuff on our site.

And me? I like business pitches. That goes from the 60-second so-called elevator pitch to the 10- to 20-minute business pitch with slides. To me, business pitches, when well done, are fascinating. I see a lot of them. I see them in my role as a member of the Willamette Angel Conference, and I get to see them as a judge at venture competitions, including Forbes’ and several business school contests. And I’ll be watching them on this site, too.

Like they say in the commercials: Do it today. Do it now. Click here.

I’ve seen so many pitches recently; literally several dozen. There was the University of Oregon venture competition, then the Rice University venture competition, one at Smart-ups in Eugene, and then we had the Big Idea Bash in Portand. I’ve seen some great pitches, actually, far more of them good than bad; but I can’t resist adding my suggestions as a quick (3-minute) video here.

If you can’t see the video here, then please click here for the YouTube source.

Palo Alto Software Ltd is delighted to announce that we will be running a number of business planning workshops in London, U.K., commencing on 27 January 2009. These business planning workshops will be run in conjunction with Company Partners, a Wokingham-England based business matching service, and will be held at the British Library in Central London. These workshops will be the perfect complement to our best selling Business Plan Pro product and will cover everything from pitching your business to understanding key elements of your business plan such as sales forecasting.

There are a small number of early bird tickets still available for this inaugural business planning workshop.

Alan Gleeson
Palo Alto Software U.K.

Business pitches are growing in popularity here in the UK as well as in the US. However, as this article, The Business Pitch by Alan Gleeson illustrates, business pitches are no substitute for the real thing – a thorough business plan!

This short article describes the concept of pitching in detail, and argues why pitches are not substitutes for business plans, before recommending some tips to ensure that your pitch hits all the right spots. Finally for some further information on what an elevator pitch is, visit Tim Berry’s article series on the Elevator Pitch at BPlans.com.

Alan Gleeson

Palo Alto Software UK

I’m sorry, but I’m angry this morning.

I just saw another blogger, who knows better, bad-mouthing the business plan as part of the startup; because investors want to know you and see your pitch first, instead of just reading a business plan.

Are the following points not so obvious that I have a right to get angry?

1. Given the choice, nobody would choose reading a business plan over meeting the people and letting them pitch.
2. Investors get the choice.
3. But Jeez! How dumb is it to suggest that you need a pitch presentation instead of a business plan?

Seriously: Don’t confuse having a plan with having a full, formal business plan document. You want a plan. And until you need to produce it as a document, skip the parts that are only for show. Do the core stuff, and leave it on your computer.

Don’t confuse not needing a full formal business plan with not wanting to have a plan. Plan your  business strategy and have some idea of who does what when, how much time and money it costs, how long it takes and how much revenue it generates. Do you really want to do a 20-minute pitch to investors without having a plan? What if they respond with a question? Are you going to say, “I don’t know, but I’ll get back to you on that?”