Bernhard Burgener asserts that you need a solid plan (i.e., pitch deck or business plan) to build a successful company. His 40 years of experience have given him a lot of insight into launching a new company. As a first-time business owner, founder, or entrepreneur, you might have heard you need a business plan or pitch deck. The next step would be a clarification about why you need them or what they are.
According to Bernhard Burgener, a business plan and pitch deck are essential materials to document the plans for your business.
What’s the difference between the two? When should you use a pitch deck over a business plan? In which case, do you need either of them? This article answers these important questions and starts first with the definitions of both concepts.
What is a Business Plan?
A Business Plan is a document usually between 10-100 pages. It describes your plans and ideas for your startup or business for the next 1 to 5 years. This document also works as a roadmap to structure your new business and can increase your chance of growth by 30%.
A business plan is text-based and should adequately explain the research you’ve done about your business. This may include your vision, potential audience, industry, market size, competitors, operational plan, and marketing techniques.
What is a Pitch Deck?
On the other hand, a Pitch Deck is a visual presentation, usually between 10-20 slides. It gives an overview of your business to pique the interests of partners, investors, customers, stakeholders, or other relevant audiences.
Pitch decks must be highly visual to capture interest and help people understand your business concept. It should also detail what your company is about, your vision, and the added value. A good pitch deck should help you impress an investor so that they are interested in meeting or joining your funding round.
What are the key elements?
Business plans and pitch decks have almost similar elements and contents. The major difference between a business plan and a pitch deck is how they are used. A business plan is a document, often in Word, that details your business plan, while a Pitch Deck is often in PowerPoint, acting as a compact version of your business plan.
The key elements of business plans include:
- Business introduction
- Market Size
- Business goal
- Industry Research
- Marketing strategies to stand out
- Capital and Resources
Key elements of the pitch deck are
- Solution or Vision
- Market opportunities
What comes first, Pitch or Plan?
Business plans often come before pitch decks. Business plans have existed for planning and building a business for a long time to help people plan for a successful business. Also, having a business plan in place will help you properly draft a pitch deck.
It is unclear when the founders started using pitch decks. However, pitch decks can be traced to the tech boom in the 90s when many companies needed a reliable funding source. Pitch decks were preferred because it takes a long time to create a business plan. Also, they act as summaries to help investors and VCs have a rough idea of your business concept.
Note: Sometimes, you may need to create a pitch deck before a business plan, especially as an early-stage startup.
Uses for a Business Plan today
Bernhard Burgener’s view is that it’s best to have a business plan to get clarity on how to build your company. Documenting your ideas and strategies in a business plan can act as a framework to aid your vision for your company. Business plans will also help you understand major aspects of your business, including costs, marketing plans, human resources, and financial projections.
The Pros & Cons of Business Plans
Some advantages of a business plan include the following:
- Contains a detailed description of your business
- Helps understand the needs and requirements of building your company
- Acts as a roadmap to guide you through every stage of your business
- Helps convince investors and build credibility with partners
- Time-consuming. It can take days and months of research to create a business plan.
- Too bulky to act as a business pitch
- Requires heavy research and analysis
- Sadly, no one else may read it.
Uses for a Pitch Deck
Pitch decks are usually associated with fundraising activities mainly because startup founders often use them to attract funding opportunities. They use pitch decks to pitch to investors, get cofounders, get an idea of your business concept, and secure customers. A general recommendation is to prepare a pitch deck if you need to raise funds from angel investors or venture capital firms.
The Pros & Cons of Pitch Decks
Some benefits of pitch decks include the following:
- It doesn’t take time to create compared to a business plan
- Easy to create and share
- Serves as a summary to introduce your company
- Helps attract or pique the interest of investors
- Requires little research
- It cannot work as a business plan
- It may prevent founders from thinking through the details
- Short term
Why You May Not Need Both
You may not need a pitch deck or a business plan as a startup founder or entrepreneur. A pitch deck is a fast way to generate interest in investors, while a business plan is a full documentation of your business idea and concept.
Your needs often depend on your business’s stage, goals, and needs. For instance, most companies need a pitch deck to attract investors during the early stages. You may need something more detailed than a pitch deck to convince your investors as you pass the early stages.
When You Need a Business Plan
A business plan is best for when you need:
- To get full details about what building your business involves
- To apply for grants
- Debt fundraising
- Government-funded grant applications
- Finalize business deals
- Add co-founders
When You Need a Pitch Deck
If you are seeking funding for your business, getting a pitch deck to attract investors for your business will be very beneficial.
You need a Pitch Deck and not a Business Plan if you are a startup:
- Seeking Funding: Pitch deck as a primary tool to introduce your business idea to investors and potential funders.
- Seeking Cofounders
- Networking and meeting with investors can help investors understand your business’s basics.
- Pitching in events or competitions for business exposure
- Applying to an Accelerator
A pitch deck isn’t the same as a business plan. A pitch deck is the child of a business plan because it contains elements derived from it. A business plan is more comprehensive, and many elements it contains may not be useful in a pitch deck.
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