A couple of years ago, I had the opportunity to participate as a judge in a local business plan competition. As I read through three of the business plans, in particular, I realized there was a great lesson to be learned for young entrepreneurs. If you want to win a business plan competition, you need to think big but have a realistic plan to get there. Let me briefly outline those three business plans to demonstrate precisely what I mean.
Business Plan 1 – The first plan had big dreams. This entrepreneur wanted to take over a multi-billion dollar industry completely. I mean take over the entire industry. Here were just a few of the problems:
- The team had no experience working in the industry
- The team needed millions to get started, but could only contribute a small amount personally
- The team had no technical/coding ability even though the business was based on technology
I admired the team’s passion for solving this problem, but there were so many holes that they could not realistically fill.
Business Plan 2 – The second business plan was technically solid. The business owner understood the industry and did significant research to determine precisely what it would take to start the business and what to expect in terms of revenue and expenses. The plan had a high chance of success, but here were the problems:
- Success for the business would be $500,000 in sales someday
- Success would be hiring three part-time employees
- Success would only impact a small group of people in their local community
This business will probably succeed, but will never make much of an impact. Realistically, this was a solid plan, but they will never win the competition because the business is too limited in scope.
Business Plan 3 – The third business plan had the best of both worlds. This team claimed that in 5 years they could be $100 million in annual revenue company with over 100 employees. That is a big dream, but here is how they backed it up:
- Customers want/need their products and services so much that in their first 3 months in business they generated over $50,000 in sales
- The team had experience in the industry
- The business plan had a very specific timeline and strategic plan to reach their goals
Do I think this company will actually reach $100 million in annual sales in 5 years? Probably not, but I do think they will win the business plan competition simply because they had the perfect mix of big dreams and a realistic plan.