What's up with this? Good ventures, represented by not-so-good plans. You read the plan first, then meet the people, listen to their pitch, and ask questions.
Last week I judged a semi-finals round at the University of Oregon's New Venture Championship for the tenth time in 11 years. Every year has been different, this year was different again, but in a new way. Two outstanding observations:
- The four ventures I dealt with were the best group of four ventures I've ever dealt with. All four had solid ventures, believable offerings, defensible positioning, interesting markets, and competent teams.
- Three of the four teams presented not-so-good plans that misrepresented the quality of their businesses. Problems began with long winding texts sprinkled with grammatical errors. Some had financial projections that left out key elements of cash flow and working capital. They had no business charts.
That's a shame. The good news is that what they had to present was so much better than what they showed in their plan. The bad news is that the plans undervalued the ventures.
While it is true that the management team, the business offering, and the market potential are much more important than the quality of the plan, it's also true that a business plan is relatively easy to do well. Why, with such a strong venture, would they not take the care to reread and edit their plans? That isn't hard.
I think it's a matter of optimizing. Why not do your best? If you're going to a graduate level intercollegiate and international venture competition, ask somebody to edit the plan for simple practical writing. Make sure your projected income and balance link up correctly with the cash flow, and that the cash flow understands working capital. Use business charts to illustrate the main numbers.
-- Tim Berry