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

Bill Payne had a nice post on gust.com late last month titled  Using your business plan, in which he lists the different forms or outputs people confuse with a business plan and sets each one into the proper use context.

He defines the elevator pitch, video pitch, executive summary, PowerPoint presentation, and business plan as different forms. This fits beautifully with my thinking that the plan is what’s going to happen, when and why, and how much it costs and brings in; and all these variations are just the output. And I like his summary:

Imagine a fishing analogy:  The elevator and video pitches are lures – used to attract investors. After pitching, give those investors a copy of your executive summary.  Interested investors will then set up a verbal presentation.  Use your PowerPoint presentation to “set the hook.”  Expect lots of questions from your investor audience.   Investors who wish to pursue investment will ask for a copy of your business plan and enter a stage called “due diligence,” spending lots of time with you validating the investment opportunity.  “Reel the investors in” and close the deal.

For more on this, you could find a lot of the same kind of thinking in my form follows function post on my Planning Startups Stories blog, part of a series on business planning fundamentals. The illustration here is from that post.

And I like Bill’s specific advice here as well. These suggestions are all excellent:

• Don’t spend too much of your time with investors talking about products and technology.  Talk about solving customer problems.
• Do not hand investors your business plan when you first meet them.  They will politely accept it and then likely throw it away before reading.  Wait until you have attracted investors and they ask for a copy of your business plan.
• Do not estimate revenues as a percentage of the market.  Do a bottom’s up analysis.  Which customers will buy how much of your product.
• Don’t overemphasize the importance of “first to market.”  Investors know that among successful giants, like Facebook, Google and Internet Explorer, none were first to market.

In case you don’t know gust.com, it’s a web platform for entrepreneurs and angel investors to meet and share information.

Can you communicate the core of your business plan in just a couple of minutes? How about in a single 140-character tweet? Our new Bplans Business Pitch tool can help you develop and refine your core message.

Add your pitch now and you can even get a FREE copy of our best-selling Business Plan Pro software. See below for details.

Elevator pitches made easy

It is increasingly important to be able to distill your startup or business idea down to its essence. Our new pitch tool makes it easy, walking you through each of the elements that potential investors and partners expect to hear. These are simple high-level questions like:

• What problem do your customers need help with?
• What’s your solution?
• What’s your business model?
• What’s your competitive advantage?
• And so on…

Each step includes expert advice and handy tips. You can even dress up your pitch with your company logo or head shot and a link to a video version of your pitch on YouTube. And you can save a copy of your pitch as a PDF to share internally or email to your advisors.

Once your pitch is published on our gallery, you will get ratings and comments from our community of entrepreneurs and small-business owners with ideas on how to improve your pitch.

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Create and share your pitch now!

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 been listening to a series of investment pitches lately, most as parts of local contest events related to angel investment. As a reaction to several of these, I have a plea: Please, start by telling me a story.

Seriously.

Start with the story of a person who has a problem, and how your company solves it. Even if you’re selling to businesses and not consumers, even then you can tell a story.

“This farmer has to fertilize her crops every two months, and when she does . . . ”

“Mabel has to package snacks for her kids for after school . . . ”

“This big company spends tens of millions every year on compiling data about . . . ”

Then, after personalizing, so that I know what you’re selling, to whom, and how it solves their problem (or, in cases of non-necessity luxury items, why they want it), then you can tell me about your secret sauce, special offering, technology innovation and knowledge of the field.

I heard 10-minute pitches where even halfway through, fully five minutes after the start, I still didn’t know what the company was selling.

Everybody likes stories. Personalize. Start with a story. If you have only 60 seconds, then cut it down to 10 or 15 of them. Make the problem and solution come alive.

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