Five Business Plan Competition Mistakes to Avoid

For the last several years, employees of Palo Alto Software have been judging business plan competitions. We sponsor many of them, in some cases providing business plan software for entrants to use to write their plans, and even giving cash awards for the best written business plans.

When we’re judging plans, we have unique criteria we use. We’re not necessarily looking for a business that we’d give our money to, since we’re not investors. We’re judging based on the quality of the business plan itself. Is it complete? Is it written, edited, and organized well? Are the financials all there, are they realistic, and do they make sense?

Over the years, we’ve read some great plans. And in fact, some of the sample business plans in our software were winners of business plan competitions that we judged and were authorized to incorporate into our products. That said, we’ve also seen some really… well… some really not great plans.

You’ll have to keep reading to find out.

Here are five inexcusable mistakes we’ve seen in business plans entered into competitions we’ve judged.

1.  The bad analogy

We received a business plan for a device that justified the pricing of their product by saying buying one would cost less than a lawsuit. As the reader of that plan said, is that really the best yardstick? If so, why aren’t running shoes priced just below an angioplasty?

2.  Flowery language

Competition plan writers should consider their readers. Sometimes that means remembering not to use tiny fonts that “aging eyes” have trouble reading. Sometimes that just means remembering that judges are reading a LOT of plans (when you get to page 40, it might be too late).

But it also means remembering that these are business plans, not romance novels. Three beautiful, awe-inspiring, ‘bright beacon’-type adjectives per page might (might…) be okay. But in one paragraph? You may have crafted a beautiful piece of prose. But that doesn’t make it appropriate for your business plan.

3.  Admitting defeat

We saw a plan that started great. It was well researched, full of detailed information about the potential market, product offering, even retail space design. It was looking like a good plan. Until the summary just before the financials, which basically said “Yeah, after all that research, we’ve determined that it would cost too much to launch this business. So we’re not going to.”

We ask for realism in the business plans we read. But there is such a thing as too much realism. If your business plan illustrates that your business is doomed, why would you submit a plan saying so to a business plan competition?

4.  Exorbitantly loquacious and pretentious

Many of the business plan competitions we judge are sponsored by colleges. So it’s safe to assume that the people submitting the plans are at least part of the way through a college education. Now, when you’re 10 years old, knowing a lot of big words and using them extensively is kind of cute. It’s also kind of annoying, but you’re forgiven because you’re 10. When you’re a college student and you load your business plan with the biggest words you can think of, and use them at every opportunity, it’s just annoying.

Even more annoying is when you use the same $2 words repeatedly. Two pages and four uses of the word “paradigm” is too much. No matter how old you are.

Overusing words is one thing. Misusing them is much more amusing. One plan we read discussed how they were going to employ ‘gorilla marketing’ tactics. Which must be a large, hairy, dangerous version of the more common guerilla marketing.

And my favorite, the weirdest business plan competition mistake that I’ve had the pleasure of seeing…

5.  A little too hip hop

You know that fake Latin text often used as a placeholder in publishing and graphic design? It looks like this:

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco l aboris nisi ut aliquip ex ea commodo consequat.

If lorem ipsum text is used in a business plan to get across the message “this is where it’s going to say something that hasn’t been determined yet and isn’t actually important in the business plan itself,” that’s one thing. Maybe you are including a screen shot of what your website is going to look like, but all the text hasn’t been written yet. That’s acceptable (though not pretty).

That block of odd text at the beginning of this post? Those are lyrics from a Notorious B.I.G. song. They appeared in an actual business plan that was submitted to a contest we were judging, showing where some text would go in an example of the company’s logo and design plans.

There might be times when hip hop references are appropriate in a business plan. For instance, if you know that the judges of the business plan competition you’re entering are hip hop afficianados. But considering the gravity of your need for funding, your desire to win the competition, and the anonymity of the judges in most cases, it’s probably going to be best to stick to lorem ipsum.