Business Plan Competition
There has never been a better time to enter a business plan competition. However, despite a number of new competitions being launched in the UK in recent months, for many entrepreneurs, the rewards have not seemed sufficiently juicy to tempt them to submit an entry. The following five sections detail the reasons you should enter a business plan competition with one notable omission – no mention of the ‘cash prize’. While the financial inducement for any competition is undoubtedly an attractive element for cash-pressed entrepreneurs, it is of secondary importance when one considers the other real benefits resulting from participating in a competition.
1. Tap into increased support for entrepreneurs
The Enterprise Report by Enterprise Insight (2005) claimed that in the UK the entrepreneurship rate of 6.3% is (just over) half that of the USA, at 11.3%. In global terms, an article by Jonathan Huebner claimed that innovation peaked in 1873 and was now declining steadily. This suggests that all may not be well with entrepreneurship in the UK. While these figures and claims may be accurate, the evidence on the ground would appear to contradict this some what.
The spirit of enterprise continues to thrive in the UK, as the government and companies alike strive to inculcate a growing sense of the rewards of entrepreneurship amongst the population. In 2009 the term ‘Entrepreneurship’ has been getting a complete makeover and now has more positive connotations than has traditionally been the case. In the past couple of years, entrepreneurship has also been an area of increased focus as evidenced by the expansion in the numbers of conferences, exhibitions and even the popularity of TV shows, such as Risking it All and The Dragons’ Den.
In an increasingly competitive global economy, creativity, innovation, and a willingness to take calculated risks are becoming the much coveted skills for the up and coming generation of school leavers. In short, there has never been a better time to be an entrepreneur, and it is now viewed as a very progressive career choice. In recent years, a range of different parties have shown a significant increase in their willingness to support and develop the next generation of entrepreneurs in the UK.
2. Obtain critical independent analysis of your business plan
Some entrepreneurs make the basic mistake of being excessively cautious and concerned that their idea will be ‘stolen’ by someone else. As a result, they can be reluctant to share their business plans with others. They fail to realize that it is the execution, as much as the idea, that distinguishes success from failure. In fact, an opportunity to have your business plan scrutinized by a number of probing eyes should be embraced wholeheartedly.
The insight that can be provided by judges of business plan competitions is usually of great value, as they are removed from the day-to-day activities of the business. They will offer different perspectives and are also likely to ask searching questions, provoking the plan authors to defend their plans and forcing the team to justify the various assumptions contained therein.
The judging criteria for many competitions tends to reflect reality very closely, as judges seek to assess whether there is a market for the idea and whether they would be prepared to invest in it. Overall, it is an enriching experience and ensures that the foundations of the plan are grounded in reality, and that any flaws in either the numbers or the presentation/business pitch are ironed out at a point where they are not fatal to the company.
3. Gain access to mentors and networking opportunities
Business plan competitions are increasingly run with supportive classes and guest lectures by a range of relevant professionals, from IP lawyers to business planning experts. These events also attract angel investors, some of whom may be interested in both investing in a fledgling company and also providing their expertise.
This is one very attractive benefit for certain inexperienced entrepreneurs who may be full of youthful optimism but lack not only the finance but also the presence, credibility and networking capabilities of more experienced mentors. Mentors will often have experienced a range of different economic climates and will be able to use their experience to advise the new entrepreneurs accordingly. Their contact list could also prove useful; effective use of networks is undoubtedly a key factor when helping an entrepreneur to gain support as they develop their idea.
4. Improve key transferable skills
New product development or business plan projects are frequently used as end-of-year projects in universities for the simple reason that they call on students to demonstrate a wide range of disparate skills and knowledge. A business plan requires the authors to collaborate effectively and to ensure that all elements of the plan work together to make a strong case for their idea. Not only does it require a compelling story, but the financials must stack up and support the viability of the plan.
There is also ample opportunity for participants to practise that notoriously neglected skill of public speaking. The requirement for participants to present their ideas verbally alongside the written report ensures that this skill is exercised accordingly. Additionally, it affords participants the opportunity to assess the effect of their presentation on the judges. These presentations are often followed by Q&A sessions which test the team further, and force them to react on the spot to challenging questions. In essence, this process reflects real life more closely than any business studies exam and improves crucial skills that are highly transferable.
5. Enhance your understanding of what investors want
One of the most critical benefits is the interaction with investors (either real or as represented by the judges). They will assess both the opportunity and the people who are proposing to make this dream a reality. If they are willing to invest, in many instances they will also want a significant role in shaping the company’s future (particularly if they lack faith in the ability of management to deliver the idea).
Many entrepreneurs will need to raise capital in the future. A good early understanding of the process, the implications the different forms of investment have on the business, and how the players operate, is vital. These investors are predominantly interested in the ability of the company to generate free cash flows so as to service their debt, reward them for the risk they have taken, and ensure that there are sufficient funds to support future growth. The very interaction with investors in the competition environment will ensure that when such investment requests are for real, the new entrepreneur will not be going into the process raw and will have some sense of the various dynamics at play.
In summary, the growing number of business plan competitions afford entrants a low-cost opportunity to “stress test” their plans in a very realistic role play. These competitions test a wide range of skills that are often neglected in the day to day tasks of entrepreneurs, who are focused on bringing their idea to fruition. Regardless of how good that idea is, the real challenge will be the execution of the business plan i.e. bringing the idea to market. By producing a credible business plan and presenting your case persuasively, you will significantly enhance your ability to secure funding. You will also justify your role as the person charged with leading the team and any opportunity to flex these diverse skills should be grasped with both hands. Over time, the benefits from these role plays will undoubtedly contribute to the future success of the business, as will the very process of planning, which forces a thorough familiarity with the various fundamentals that interact to ensure the running of a successful business.