Do pitch decks and business plans cover the same ground in terms of the information they include? This is a common concern voiced by entrepreneurs who are looking for support. Both of these things are going to be necessary for new business owners in order to successfully acquire reliable financial backers. It begs the question, what ties these two together and separates them at the same time? This in-depth course outlines the key differences between business plans and pitch decks, as well as why pitch decks are so important.
The creation of a business plan guarantees that you will have a good plan and will be able to justify all of your assumptions even after making changes to the plan or the business itself. It is essential to examine and amend the business plan on a regular basis in order to account for the shifting aims and priorities of your firm as it evolves through time.
Business Plan and Pitch Deck Definitions
In the not-too-distant past, there was a widespread mentality that the robustness of a company’s business plan was directly proportional to the likelihood of that company’s financial success. Thus, before to embarking on any endeavors of substantial significance. There is no doubt that this action was taken for a very good purpose. In recent years, a number of business owners have adopted the practice of using pitch decks as an alternative to the more conventional business plan.
Which of these two approaches do you believe is going to provide the best results? Does it matter what sort of business you’re establishing or whether you have a plan for obtaining money? Is it more effective to work together on a strategy? In what proportion should you split your attention between the two different initiatives, and which of them should take precedence over the other?
- Business Plan: The vast majority of business plans are extensive. The business is fully explained. Everything from the organizational structure and marketing strategy to the requirements for a new business and financial projections for the next five years was discussed. A far more thorough game plan is also included. The normal method of composition for this is Microsoft Word, and it may be as long as 25 pages. To begin, a clear and succinct executive summary is presented below. The number of pages might be somewhere between one and three.
The number of pages in a thorough business plan might vary anywhere from five to one hundred. It offers a venue where the one-, three-, and five-year goals of your organization may be documented and discussed. You should offer all of the market and competition information that you’ve gathered in your business plan. In this section, you will detail your plans for your business as well as your promotional and operational strategies. It provides a description of the future of your firm as well as the steps that you intend to take in order to attain that future using the financial projections and assumptions that you have made regarding its growth and performance.
The bulk of the content is offered in written form inside this paper; however, it does include graphical representations of growth and financial strategy.
The management team of the firm and the specific areas of expertise that each member has are broken out in great detail in the business plan. Quite a few graphs, pictures, and photos are included in the article on a regular basis. Despite this, it places a strong focus on the explanations provided in the text. The decision of whether or not to invest in your firm will be based on the business plan that you provide to potential investors. It is a regular part of the phase of the investing process known as “due diligence[1].” The purpose of a business plan is to explain to potential investors how you and your team intend to produce money over the course of the next years.
If you are looking for equity money, there is only one reliable approach to evaluate the value of your firm, and that is to create a detailed business plan that includes financial predictions, distinct assumptions, and the long-term objectives of the organization. If the company intends to raise equity, the members of its management team need to possess a wide variety of talents. Any expertise gaps should be supplied by non-executive directors and a solid advisory board.
- Pitch Deck: A presentation that is made up of slides is known as a pitch deck. Construct a presentation using either Microsoft PowerPoint or Google Slides. It is recommended that your pitch deck have between five and twenty slides. An alternative to the traditional lengthy business plan, this one is streamlined, simplified, and streamlined even more. Pitch decks have become a popular method of communicating with prospective investors due to the importance of capital creation for new businesses.
It is common practice for entrepreneurs to either send a PDF of their pitch deck to potential investors in order to pique their interest and obtain an in-person meeting with them, or to use the deck as a visual assistance during a live presentation to investors or other audiences, such as during pitch contests. This is a common practice because it increases the likelihood that the potential investor will be interested in the entrepreneur’s business idea. It is possible to utilize pitch decks in order to showcase an idea to potential clients as well as potential investors.
It goes into further detail on the prospects for the future and describes a plan for entering the market. Your knowledge of the industry, as well as your business launch and growth strategies, are quite important.
Building Blocks of a Successful Business Model
To put it another way, what is it about your business and your product or service that sets it apart from others, and what are the factors that will ultimately contribute to your level of success?
- Do you plan to keep the focus of your business on the domestic market, or do you see expansion into foreign markets as a potential possibility? How do you plan to move this forward, and over what span of time do you see it happening?
- Assess not just your potential competitors in the market but also the ease of entrance for both newcomers and yourself.
- The track record of your management team will provide investors with peace of mind; accordingly, if you lack the requisite talents, how do you plan to compensate for this shortcoming?
- Your current as well as your projected financial state (with detailed assumptions based on research). Everything should be doable and attainable within a reasonable amount of time. They will present you with goals that are impossible to achieve if they are too enthusiastic, which will have a negative impact on the whole business plan.
- Providing the reader with a thorough grasp of the process and the setting in which the data was collected requires that you provide an explanation of your production, distribution, supply chain, and route to market.
Current Applications for Business Plans
- Each and every entrepreneur and business venture have to have a plan. Everyone is aware of the consequences that might occur when planning is not done. Despite this, what is considered useful and important in terms of business ideas may be subject to change and development.
- If you use a business plan, it’s possible that your ideas may get more breadth and depth. It includes a greater quantity of information than one could possibly provide on a pitch deck. With the help of this method, owners of businesses are able to conduct an in-depth analysis of both the short-term and long-term aspects of their business plans. It is useful for calculating accurate figures for a variety of items like marketing budgets, starting expenses, cash reserves, and profit estimates.
- In addition to this, it serves as a foundation upon which to develop. A workable plan for the business must also get a lot of attention and consideration.
- It is not impossible for a one-page business plan, executive summary, and action plan to be sufficient to sate the requirements of investors, advisers, and other essential stakeholders. Providing, of course, that it comes with an engaging pitch deck.
- It is possible that you may still be needed to provide a business plan in some circumstances. To qualify for various loans, leases, memberships, and licenses, you must complete specific prerequisites.
Benefits and Drawbacks of Having a Business Plan: Modern Application
The Following Are Some Of The Advantages Of Having A Business Plan:
- One is compelled to attend to particulars if they are of interest.
- Developing a thorough plan and being aware of your real requirements are both essential.
- Being able to live up to obligations that have been made.
- Reputation among prospective business partners and first investors
- Being prepared to provide information in response to a request
- The benefit of having a detailed plan in front of you at all times.
The Following Are Some Of The Drawbacks Of Business Plans:
- It’s possible that no one else will ever read this.
- Because of how quickly society is changing, it’s possible that many of today’s most pressing issues may be rendered moot in just a few short months.
- All that you put into it, including your time, effort, and forward progress, is wasted away into an unending void.
- As a consequence of this, a lot of people who want to start their own businesses end up becoming stuck, and as a result, they miss out on some of the best possibilities.
- The costs are quite high while the advantages are just marginally beneficial.
- It seems that you are inexperienced in banking from the perspective of more seasoned bankers.
Pitch Decks: Modern Applications
A Pitch Deck May Be Useful For Purposes Other Than Fundraising.
The term “pitch deck” is almost synonymous with the process of funding for a company. But you should not limit their use to fundraising events or times alone. You may use them whenever you choose.
In point of fact, pitch decks will be necessary from the minute you contact a company until the moment you leave that company.
The Following Are Some Examples To Illustrate:
- Developing and improving the underlying idea and model of your business plan.
- Gathering preliminary comments and input
- Seeking for Founding Members
- Using Industry Professionals in the Role of Mentors
- Early stockpiling of manpower that will be required
- Providing online as well as in-person presentations to potential investors
- Establishing a core customer base while also cultivating strategic ties
- With the organization of a variety of events that raise money
- Finding a way out of the situation
Benefits and Drawbacks of Using a Pitch Deck in the Current Day
Following are the benefits of using a pitch deck:
- The use of pitch decks comes with a number of distinct benefits.
- Prevalent in campaign funding
- A more straightforward framework for the development of a condensed business plan
- Adaptable to a variety of uses and changing with the passage of time
- Faster generation times
- There is a greater possibility that it will be used often and referred to.
- Simpler to distribute
- Your capacity to do business is enhanced as a result.
Following Are The Pitch Decks’ Drawbacks:
- It’s possible that there wasn’t a precise plan or design to begin with
- Insufficient planning might lead to oversights that could have fatal consequences.
- Incompetence in the face of a need for a business plan.
- Placement of emphasis on showmanship and hyperbole at the cost of content or substance.
- Predictions on a timeline that is extremely close to the present
If You Had To Choose, Whatever Came First, The Business Plan Or The Pitch Deck, Which Would It Be And Why?
- The business plan has been around for quite some time, and it has shown to be an essential tool in the establishment of several enterprises, as well as in the planning for and acquisition of finance for such firms.
- Research is the only way to ensure that your preparation is thorough and that your decisions are well-informed. Achieving your goals requires rigorous preparation and well-informed decision making. Investigation is required into both the consumers and the challenges they face, as well as the consumers’ and rivals’ respective strengths and shortcomings. There was a time when banks were the major source of financing for startups, but today there are a range of options, such as equity investments from venture capital companies. In the past, banks were the primary source of funding for startups. It was required to prepare a business plan in order to convince the financier that the company would be successful in generating profits. Following that, this became an everyday occurrence. Even in today’s modern times, business plans are often demanded by financial institutions as part of the loan application process. Some people may request or accept pitch decks in addition to or in place of a business plan.
- It is unclear who created the first pitch deck or when investors first started asking them; but, based on past practice, we are able to extrapolate some parts of the process. Venture capital companies developed as a viable alternative financing option.
- In the past, laying the foundation for a modern digital giant required a significant investment of time and money. It was essential to not only design and create websites but also provide supporting materials (like servers, mainframes & networking components). These needed the purchase, setting up, as well as the operation and maintenance of equipment.
- Despite this, conventional businesses and their internet counterparts are not really similar at all. Since the likelihood of a company, such a restaurant or factory, becoming profitable in the future was unclear or dangerous, financial institutions were hesitant to lend money to such businesses. As a result, venture capitalists and angel investors stepped in to fill the gap. It was agreed that a portion of the ownership would be transferred in return for monetary compensation.
Conclusion
Both the tried-and-true business plan and the brand-new pitch deck come with their share of benefits and drawbacks. When you multitask, you increase the number of distractions you face and the amount of time it takes to get into the game.
In the very competitive atmosphere of modern fundraising, the most successful entrepreneurs are often those that have a compelling pitch deck, a business plan that is just one page long, and an executive summary that is just as compelling.
Do not undervalue the significance of having a true plan, since doing so would significantly reduce its value. It’s possible that you’re working against your own future successes and efforts by doing this. It is recommended that you develop a formal business plan even if your long-term goal is to maintain your status as a sole proprietor or to run a small, local business. Nevertheless, if you are the creator of a quickly developing firm that is looking for financing, you may find that a pitch deck is even more vital. It is quite possible that the pace of your activities will be unable to be reflected in your company’s business plan.
Making a strong pitch deck should be your first priority if you have to choose one. If you carry out these steps in the correct order, you will be provided with a solid foundation upon which to build the actual business plan for your company. This will, at the very least, put you in a position to attract investors while you develop your workforce and secure your first customers.
Also Read:
Essentials To Create A Compelling Investor Pitch Deck
How To Prepare A Business Plan? – A Complete Guide For Startups
