Are Business Plan Competitions Worth Entering? Part 2: 6 Questions to Ask Yourself

This is the second in an, oh, let's call it four-part series of blog posts about deciding whether entering a business plan competition is a good idea for you and your company (I'm not sure how many posts there will be because every time I sit down to write, I wind up writing more than I anticipated.  Those of you who receive emails from me on a regular basis will be familiar with this phenomenon!).

I was inspired to write this series by a conversation with Len Schlesinger, president of Babson College, successful businessman, accomplished academic and innovative administrator. His questions to me about the value of business plan competitions for competitors and the community were thoughtful and thought-provoking. Given that I've co-founded and chaired one (Ignite Clean Energy), helped it merge with another (Cleantech Open), been a judge in a few (MIT Clean Energy Prize, ICE, CTO) and a competitor in one (MassChallenge), I have an unusually broad perspective on the issue.

In the first post, I focused on the Pros and Cons of entering a competition, which led me to the conclusion that the short answer to the question posed in this blog's title is "It depends." I think the answer is yes, provided you focus on how the competition can help you build a better business and not on winning. That way, win or lose, you have moved your company forward, possibly faster than would otherwise have happened.

In this post, I'd like to propose a few questions that I encourage you to consider before making a decision, each of which I hope will help you get to an answer that works for you and for your company.

Questions to Consider Before Entering

1. Would you be starting this company if it were not for the competition?
   Your answer should be an emphatic "Yes!", or if it's "No", then you should only enter if you have a lot of time on your hands and/or you want to learn about being an entrepreneur. The first year I ran ICE, I recruited Marc Cressey, then a freshman at Wentworth Institute of Technology, to compete even though he didn't even have an idea at the time. He put together a team and they did well - and he learned that he really liked being an entrepreneur. In the six or so years since, Marc and I have stayed in touch. I wish I could say that he's now the CEO of a funded clean energy startup, but life isn't usually quite that neat. What I do know is that he has continued to take risks and move his career forward. I am looking forward to following his career and I hope the lessons he learned at ICE will serve him well throughout.
2. Could you use an experienced mentor in an area where you're not well networked?
   Probably the single best outcome of entering a competition for most teams is that they get access to mentors who they might not otherwise even meet. There's nothing like an experienced, interested mentor to help you avoid making big mistakes while making big decisions. There are a couple things to watch out for, though: you want mentors who are well qualified and who aren't doing the work just to land new clients. David Miller and Roger Nauth, who have run the mentoring committee for ICE for years, have required mentor applications and approvals as well as minimum time commitments and the result has been a top-notch mentoring program. Commitment is crucial: just being introduced to a great mentor or contact doesn't have nearly the potential impact on your business as having someone who is committed to giving you advice over an extended period. Talk to others who have been through the competition you're considering entering and find out how happy they were with the mentoring experience before making your final decision.
3. Do you need to build a network within the business and investment community?
   Most competitions will go out of their way to provide you with opportunities for meeting business leaders in informal networking events as well as more formal matchmaking events. You're also likely to get opportunities for media attention (especially if you do well). These kinds of contacts can really help you to become known in your industry locally... but bear in mind that you will have plenty of competition for their attention from all the other competitors! That circumstance is not all bad, though. As with most things, it's an opportunity if you look at it the right way. If you think it's tough to get the attention of an investor at a competition-sponsored networking event, you'll be in for trouble when you are networking in the 'real' world. In fact, such networking events are ideal events to practice and hone your 30 second elevator pitch and 3 minute cocktail party pitch in an environment where people expect you to try out different approaches and maybe not be as smooth as possible. All of which leads neatly into my next question:
4. Do you need to learn or improve your skills as an entrepreneur?
   One thing that competitions are especially good at is giving you opportunities to hone your elevator pitch (see the networking item above!), your ten minute investor pitch, your business plan and how to talk with investors and others. Even if you've built companies multiple times, you can still benefit from a safe place to refine your pitch, fresh eyes to review your business plan and new connections if you're entering a new field. Another benefit to a competition is that it's a relatively safe place to take chances and make mistakes. You can blow your pitch in front of judges without it damaging your credibility in the community - they are there to help you as well as to judge you. In contrast, making your pitch too often or too poorly outside the confines of a competition can damage your reputation by making your company seem shopworn or your business skills less than sharp.
5. Are you having trouble getting "important but not urgent" tasks done?
   This is a tricky one, because you can use competition tasks to keep you from getting other business things done. However, if can't seem to make the time to put together a good investor pitch or finish your business plan, the deadlines inherent in a competition can catalyze your getting them done. The judging rounds are when they are. It is remarkably focusing to know that you will pitch to respected business leaders on a specific date at a specific time. Plus you're likely to have lots of help to get the job done as well as a community of people who want you to succeed, for your own sake and the sake of the competition. In fact, just being in a large group of other people with the exact same deadline to do the exact same thing can generate a lot of mutual support. It is my experience that almost all competitors want you to succeed almost as much as they want it for themselves, and most will go out of their way to help you out.
6. Can you leverage your responsibilities for one competition to satisfy the demands of another, or of your business?
   Most quality business plan competitions have similar deliverables: a PowerPoint presentation, a business plan, an executive summary and the like. The kind of information they want on their applications is similar. So if there are a couple of competitions that give you access to different resources but don't demand radically different deliverables, then you may wind up multiplying your return on investment for a marginal additional cost. Plus, you'll have a set of pitches and plans that have been vetted by multiple mentors and polished through multiple iterations that you can use in your business and vice versa. For example, I encourage cleantech companies to enter both the Cleantech Open and MassChallenge if they've given affirmative answers to the above questions. One competition gives you deep exposure into your industry and the other gives you broad exposure to the Boston business community along with a kick-butt view of the Boston Harbor if you're fortunate enough to be able to make use of incubator space in Boston. The competitions run on approximately the same schedule and are both quality competitions. If you can focus and not get caught up in hype (go back and read the Pros and Cons post!), then entering both can be a positive experience for you and your company.

I'm sure there are other questions to be asked - I'd certainly like to hear from you what you think I've missed, or any comments on the questions I've posed above.

Next time: Part 3: Learn from the Competitions Themselves, or how to make your startup better by studying how the competitions start, grow and sustain themselves.