Pitch Decks vs Business Plans: Which is Better for Raising Capital?
If you're an entrepreneur, there's a good chance you've been told that you need to create a business plan in order to raise money from investors. However, this may not be the case anymore. A lot has changed in the past few years, and business plans are no longer required by most investors. In this blog post, we'll discuss why pitch decks have replaced business plans as the go-to tool for raising capital. We'll also provide tips on how to create an effective pitch deck that will help you secure funding from investors!
What's the difference between a pitch deck and a business plan?
A pitch deck is a shorter and more concise document that outlines your business strategy and goals. It is typically used to give investors an overview of your company and to get them excited about investing in your business. On the other hand, a business plan is a much longer and detailed document that outlines all aspects of your business. It is often used to secure loans from banks or to attract large investors.
What is the problem with business plans?
The problem with business plans is that they can take a long time to prepare, and they often become outdated quickly. This is because business plans are based on assumptions and projections that may not turn out to be accurate. In contrast, pitch decks can be created relatively quickly and are more flexible, since they can be updated as your business changes and grows. Finally, they can be quite boring. This is because they often include a lot of text and numbers, and they can be quite long. This can make it difficult for investors to read and understand, and it may even put them to sleep!
So in summary,
Takes too long to write
Contains more inaccuracies
Can be boring to the investor
How long does it take to write a business plan?
It can take anywhere from a few weeks to several months to write a business plan, depending on the size and scope of the business. For a small business, a business plan may only be a few pages long. However, for a larger business, a business plan can be hundreds of pages long.Another advantage of pitch decks is that they are much more interactive than business plans. This is because they typically include slides with visuals, such as charts and graphs. This makes it easier for investors to understand your business and to see how it is performing.
Why are business plans inaccurate?
The main reason why business plans are inaccurate is because they are based on assumptions and projections. This means that the information in the business plan may not turn out to be accurate in the end. This can be a problem for entrepreneurs who are trying to raise money from investors, because it may make it difficult to secure funding if the investors don't believe that the business will be successful.
Another reason why business plans may be inaccurate is because they can take a long time to prepare. This is because businesses often change and grow over time, and the information in the business plan may no longer be relevant by the time it is finished. This can make it difficult for investors to understand your business and to see how it is performing.
How long do investors spend reading a business plan?
Most investors will spend only a few minutes reading a business plan. They may skim through the document to get an overview of the business, but they are not likely to read it in detail. This is because business plans are often quite long and complex, and investors typically have a limited amount of time to review them.
How is the structure of a business plan different from the structure of a pitch deck?
The structure of a business plan is typically linear, with an executive summary followed by a section on the company, the product or service, the market, the competition, the financials, and the team. A pitch deck, on the other hand, is typically more visual and interactive. It is also shorter and more concise, and it is often organized around a central theme or idea. Additionally, a pitch deck may include elements such as video, infographics, and slideshows.
How is the length of a business plan different from the structure of a pitch deck?
The length of a business plan is typically much longer than a pitch deck. This is because a business plan includes more detailed information, such as financial projections and market analysis. A pitch deck, on the other hand, is typically shorter and more concise.
What software is used to write business plans? How is it different from software used to create pitch decks?
There is a variety of software that can be used to write business plans. This includes word processing software, such as Microsoft Word, and spreadsheet software, such as Microsoft Excel. There is also specific business plan software, such as LivePlan and Business Plan Pro. This software often includes templates and tools to help you create a professional and well-organized business plan. Software used to create pitch decks is typically more visual and interactive. This includes presentation software, such as Microsoft PowerPoint, and video editing software, such as Adobe Premiere Pro. This software often includes templates, fonts, and icons to help you create a visually appealing and professional pitch deck.
Should you include detailed financials in your business plan?
It is not necessary to include detailed financials in your business plan. However, you may want to include financial projections to give investors an idea of your expected revenue and expenses.
What are the current trends related to business plans?
There is a trend towards shorter and more concise business plans. This is because investors are often looking for a quick overview of the business, and they don't want to read a long and detailed document. Additionally, many business plan writers are now using interactive pitch decks instead of traditional business plans.
How much should you pay to create a business plan?
There is no set amount that you should pay to create a business plan. Prices can vary depending on the length and complexity of the business plan, as well as the amount of time and effort required to create it. You may want to consult with a professional business plan writer to get an estimate
If you still need to create a business plan, some tips for writing a business plan include: doing your research, being clear and concise, and tailoring the plan to your specific business.
What are some alternatives to business plans?
Some alternatives to business plans include pitch decks and executive summaries.
Our recommendation:
Start with a business model canvas. A business model canvas is a tool that can be used to create a business plan. It is a visual chart that includes information on the key components of a business, such as the customer segment, value proposition, channels, and revenue streams. Once you create the business model canvas, start building out your pitch deck before you tackle the business plan.