If you’re
planning to enter a business-plan competition, most judges are looking for you
to really demonstrate and understanding of your businesses, which of course can
come from actually getting it started. Here are the top six elements they look
for:
- A clear upfront explanation of exactly what the product does and who benefits from it. If
you can’t tell me what you do in one slide with a couple bullet points, you’re in trouble. Everything else
you tell me up to the point where you say what you do, I will forget.
- A clear definition of a need
and value in the market. Do customers really
want what you’re planning to sell. Do they need a better mousetrap, or do they already have something
that is good enough? Why have you
chosen to offer this particular product or service—simply because you know
how to do it, or because consumers really want it? Finally, why do they
want it from you? Do customers
already see greater value in what you have to offer versus your
competitors?
- Evidence of direct contact with customers and suppliers. How many potential
consumers have you talked with—10? 50? 100? It’s a continuing frustration to
encounter students from the best B-schools who haven’t bothered to reach
out to anyone in the marketplace to gather intelligence from the people
who will actually use the offering or to identify the cost of selling the
product. Not only will this kind of
contact help produce a better business plan, but it will help create a
better product or service by incorporating features most important to the
potential buyer.
- Do you have a real customer or some in the pipeline? If you already have people you’ve sold
to— or at least people you’ve talked to about the product and its price—it
demonstrates you’ve done your work on building your business, and your
odds of succeeding go up.
- A bottoms-up approach to sizing the
opportunity. Have you figured out
what customers are willing to pay and how many customers are available? Just Googling the marketplace and
looking for analysts estimates is not sufficient research. You must talk to people to determine a
price point, the urgency of the need and the breadth of the market. Multiply the number of potential
customers by the price, and you come up with the true addressable
market. You should also build 12-month
financials with this bottoms-up strategy. How many people will it take to deliver your product to the first
five customers? The next ten? How much sales and marketing support
will you need? It also tells judges
you have a realistic understanding of how to build your business.
- What’s your funding strategy? How much do you have to accomplish before
you can raise or borrow money? Does
the product need to be ready for market or only the first phase completed?
What do you need to accomplish with the initial capital you receive to go
back in 12 months or 18 months for more?
Explore the
market, not just your mind, and you’ll have a far better likelihood of emerging
from your next competition and into the real world as a winner.
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