Business Plans and Pitch Decks – when do you need each?
Lengthy, detailed business plans aren’t necessarily dead, but they have been overshadowed in recent years by the need for short and sweet pitch decks.
So how do you know which approach to use?
The answer requires you to consider two important factors — your audience and your purpose.
Why are you writing this plan in the first place? Are you trying to organize your thoughts to create more of an internal document? Are you trying to raise money from angel investors? Are you trying to raise money from sophisticated investors? Are you trying to get an SBA loan or other bank loan?
Depending on who reads the document and its purpose, your business plan will take various forms. Venture capitalists don’t even want business plans; they prefer short, sweet slide decks and your pitch. If you’re pitching to the right investor, then they already know your market, the benefits of your product or service, the competition and barriers to entry, etc.
If you’re looking for a loan from a bank or an angel, then you probably need to provide greater detail and more of a formal business plan. Length isn’t necessarily a good thing and, at some point, becomes a detraction to your overall message. Banks understand real estate, so they’re going to need more detail on your business.
If you’re creating a document to organize your thoughts because you plan to bootstrap your business, then be as detailed as possible in your research. Remember, you’re developing a fluid document that changes with time. Since only you and your executive team are reading it, you have the freedom to refocus and think about the long-term vision.
So, again, the lesson here is to consider your audience and your purpose when determining the best approach for your business plan.