Whenever you start a company, there a few things you should do. Many business men will tell you to start off by crafting the perfect business plan. Although a crafting a business plan will never hurt, it is highly overestimated.
Even top universities such as The Erasmus University in the Netherlands teaches their students to stop wasting time on a business plan. The number one masters in entrepreneurship teaches it’s students to start by putting your company on one piece of paper.
‘Business plans aren’t flexible and don’t get read by investors. The only reason why you should create a business plan is to force yourself to think about your company, but there are other ways to do this too’.
I’ve experienced it myself, over the past year I’ve talked to over 30 investors. Of those 30 there were only 2 investors who asked for the business plan. The others are more interested in the product, the market and the team.
The Business Plan Pitch Battle
Importance of a pitch
Since many investors don’t have time to read your business plan, you should use your time to focus on your pitch. Unfortunately, many entrepreneurs work months on the perfect business plan and only use a few minutes to think about their pitch. Actually, many don’t even write their pitch, they rather ‘improvise’ one.
That’s crazy if you think about it.
Is your startup ready to pitch?
How often investors listen to a pitch
Investors listen to over 20 pitches every week. Whether it’s during a face to face meeting, during an informal occasion or through a formal investor meeting.
Because investors listen to many pitches, they’re able to quickly identify a potential goldmine versus a dead end.
How often investors read a business plan
As mentioned, investors don’t have the time to read a business plan. Although there might be some informal investors, they usually scan the main parts before jumping to the financials. Many investors don’t even take time to read anything at all.
Why you should still make a business plan
Now you know where you stand in the business plan pitch battle, there’s something I would like to advise you on.
Although a pitch seems to be superior to the business plan, it’s still smart to create a business plan. However, don’t expect others will actually read it. You should write a business plan and use it to help yourself. By forcing yourself to write a business plan, you make yourself think about aspects of your business you would never have otherwise.
I still dig up my business plan every now and then, just to make sure I’m going in the same direction I once intended to.
Write a business plan, but don’t expect investors to read it. Instead of wasting a lot of time on making your business plan perfect, use it to construct a solid pitch.
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