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.
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.