The Entrepreneur's Arsenal: Pitch Deck vs. Business Plan

Pitch deck vs. business plan: which one do you need for your business, and when? As a businessman or entrepreneur, do you sometimes wonder why your potential investors aren't responding after you've sent them a long and detailed business plan or a catchy pitch deck? This could be due to the minimal information provided in the pitch deck or the lengthy, boring, and irrelevant details in the business plan that repelled them from reaching back to you. However, you should also know how to send pitch decks to investors. Therefore, it's crucial for an entrepreneur to understand which approach is best for their venture. Before seeking out investors, one should be very well aware of the difference between a pitch deck and a business plan. Luckily, we have all the information you need. Check out our resource on how to send a pitch deck to investors.

Pitch Deck vs Business Plan

What are pitch decks and business plans, and how do you write them? Let’s find out.

Purpose

A business plan identifies, describes, and analyzes a business opportunity and/or an existing business. It focuses on the technical, financial, and economic viability of the idea, and explains in detail the plans your company has for the next 1, 3, and 5 years. This document is used as a reference point by potential investors when deciding whether or not to invest in your company. Furthermore, it's frequently used in a due diligence step in the funding process. A pitch deck, on the other hand, is a much more summarized version of a business plan that aims to excite investors about a company, to set up a second meeting and the possibility of an investment discussion. It is a pitch presentation used by business owners or entrepreneurs to give potential investors, like venture capitalists or angel investors, a concise but informative overview of their startup or company. Investors can use it to see where your business stands and where it is going, and decide whether they want to support it in getting there. It is purposefully sent to potential investors in order to set up a face-to-face meeting or used as a visual aid during a live presentation to potential investors.

Included Information

A business plan contains the research you have conducted on your industry and competitors as well as your company's operational, marketing, and sales strategies. It also includes financial analysis, growth, success projections, and a road map of where your business will be in the future and how it will get there. These nine sections are combined in a traditional business plan design in one way or another:

• Executive summary
• Business description
• Market research
• Operational plan and management
• Service or line of goods
• Sales and marketing
• Money request
• Financial estimates

If you want a professional business plan, it is highly recommended to use a business plan consultant. On the other hand, a pitch deck usually covers the following sections:

• Introduction
• Problem
• Target market
• Solution
• Traction
• Marketing and sales strategy
• Pitch Deck Competition Slide
• Funding request
• Financial Strength
• Team

You can find all the details in our Pitch Deck Outline article. Another element of information that should be included in a pitch deck is how much money the company intends to raise, for what amount of equity, and how the money will be spent. Therefore, it must contain expected financials and a pre-money company valuation. You can also include a timeline of significant events in the company's history, which will help convince investors to approve the funding.

Length

The business plan is a lengthy, in-depth document that typically has 10–100 pages and is created in Word. It is primarily text-based. On the other hand, the pitch deck's length ranges between 10 and 20 pages and is produced using PowerPoint with the intention of using visual aids such as pictures, graphs, tables to convey as much of the critical information as quickly as possible.

Situations Where a Business Plan Is Needed

• Obtaining Debt Financing from Conventional Banks: If you want to obtain any type of loan from a bank, you will need to submit a business plan, as they still review them.
• Company Having Multiple Co-Founders and Co-Owners: A business plan is quite helpful in managing a bigger board of seniors in the company. It ensures that everyone sticks to the company's core values and carries out the intended plans to achieve long-term goals. This should be a dynamic document that is continually updated as circumstances warrant.
• Fundraising over $500K: If you are raising a large amount of cash, you better have a strategy in place for how you are going to use it. Be ready for due diligence from investors.

For an in-depth guide on startup business models, click here.

Situations Where a Pitch Deck is Needed

• Meeting or Starting a Conversation with an Investor: A pitch deck is a conversation starter that encourages investors to get in touch with you. You can email a PDF file or send a printed copy to start building a relationship with investors.
• Pitching in a Competition: The startup community organizes many pitch competitions and events that provide business founders the opportunity to practice pitching their business and gain exposure. In these competitions, a pitch deck is a must-have document that effectively communicates the startup plan.
• Seeking Equity Funding: If you are seeking funding from venture capitalists, angel investors, or knowledgeable friends and family, you need a clear pitch deck.

What to Write First - Business Plan vs Pitch Deck?

At the initial phase of a business, a fundamental document called a business plan is written. This plan is updated as the business develops and as needs and goals change over time. The lengthy document can serve a variety of purposes, including internal use within the company or in banks that still require business plans for loan applications today. Additionally, the business plan document can be very useful in creating a compelling pitch deck. In the eyes of professionals, the pitch deck is considered a child of the business plan. Having a prepared business plan makes it much easier to get depth and length in your plans, which eventually results in more clarity and strong points that you could include in a pitch deck. Research is already completed when writing a business plan, which allows the pitch deck to focus on composing the already-existing information in such a manner that encourages the investor to approve the funding you need.

The Pros and Cons of a Business Plan vs. a Pitch Deck

Both business plans and pitch decks have their advantages and disadvantages. Let's take a closer look at the pros and cons of each.

Business Plan Pros

• Comprehensive: A business plan is a comprehensive document that covers all aspects of your business, from your market research to your financial projections. It may be helpful to seek assistance from a financial modelling agency when creating your financial projections.. It provides potential investors with a detailed understanding of your business and its potential for success.
• Strategic: A business plan helps you to think strategically about your business. By analyzing your industry, your competitors, and your own strengths and weaknesses, you can create a plan that maximizes your chances of success.
• Useful for fundraising: A well-written business plan can be an effective tool for raising funds from investors. It provides potential investors with the information they need to make an informed decision about whether to invest in your business.

Business Plan Cons

• Time-consuming: Writing a comprehensive business plan can be a time-consuming process. It requires a significant amount of research, analysis, and writing.
• Outdated quickly: Business plans can quickly become outdated as your business evolves and circumstances change. This means that you may need to update your business plan regularly to ensure that it remains relevant.
• May not be read: Some investors may not have the time or patience to read a lengthy business plan. This means that your hard work may go to waste if your plan is not read by the right people.

Pitch Deck Pros

• Concise: A pitch deck is a concise document that provides potential investors with a quick overview of your business. It is designed to be easy to read and understand, which makes it more likely that it will be read by potential investors.
• Engaging: A well-designed pitch deck can be an engaging and memorable way to present your business to potential investors. It can help you to stand out from the competition and make a strong impression.
• Can lead to meetings: A pitch deck is often used to secure meetings with potential investors. If your pitch deck is well-received, it can lead to a face-to-face meeting where you can provide more detailed information about your business.

Pitch Deck Cons

• Limited information: A pitch deck provides only a limited amount of information about your business. This means that potential investors may not have a complete understanding of your business and its potential.
• Not suitable for all businesses: A pitch deck is not suitable for all businesses. If your business is complex or requires a significant amount of explanation, a pitch deck may not be sufficient.
• Not as useful for fundraising: While a pitch deck can be used to secure meetings with potential investors, it may not be as effective as a business plan for actually raising funds.

Ultimately, the decision to use a business plan or a pitch deck will depend on the specific needs of your business and the goals you hope to achieve. It's important to understand the pros and cons of each and use them appropriately to effectively communicate your ideas to potential investors.

How to Create a Winning Pitch Deck

Creating a pitch deck that stands out can be a challenging task, but it's essential if you want to attract investors to your business. Here are some tips to help you create a winning pitch deck:

1. Start with a Strong Introduction

Your introduction slide should grab investors' attention and make them want to learn more about your company. Use a catchy tagline, a powerful image, or a compelling statistic to draw them in.

2. Focus on the Problem You're Solving

Your pitch deck should explain the problem you're solving and why it matters. Use real-world examples and statistics to illustrate the problem and show why it's important.

3. Explain Your Solution

After you've described the problem, explain how your product or service solves it. Be clear and concise, and focus on the benefits of your solution.

4. Show Traction

Investors want to see that your company is gaining traction and making progress. Include data on customer acquisition, revenue, and growth to show that your business is on the right track.

5. Describe Your Marketing and Sales Strategy

Your pitch deck should explain how you plan to market and sell your product or service, including specifics on your target market, your marketing channels, your sales process, and any startup market research services you may use to gain insights into your target audience and industry.

6. Highlight Your Competitive Advantage

Investors want to know what sets your business apart from the competition. Explain your competitive advantage and show how it gives you an edge in the market.

7. Be Realistic About Financial Projections

Your pitch deck should include financial projections, but they should be realistic. Don't exaggerate your projections or make unrealistic promises. Instead, focus on achievable goals and realistic timelines.

8. Keep It Simple and Visual

Your pitch deck should be simple and easy to follow. Use visuals, such as graphs, charts, and images, to convey your message and make your presentation more engaging.

9. Practice, Practice, Practice

Finally, practice your pitch deck until you're comfortable delivering it. Practice in front of friends, family, or colleagues, and ask for feedback. Refine your presentation until it's polished and persuasive.

By following these tips, you can create a winning pitch deck that will help you attract investors and grow your business. Remember to start with a strong introduction, focus on the problem you're solving, explain your solution, show traction, describe your marketing and sales strategy, highlight your competitive advantage, be realistic about financial projections, keep it simple and visual, and practice, practice, practice.

Tips for Writing a Compelling Business Plan

Writing a business plan can be a daunting task, but it's an essential step in securing funding for your business. Here are some tips to help you write a compelling business plan:

1. Know Your Audience

Before you start writing your business plan, it's essential to know your audience. Who will be reading your plan? What are their goals and objectives? What information do they need to make a decision? By understanding your audience, you can tailor your plan to their needs and increase your chances of success.

2. Keep It Concise

While a business plan is a detailed document, it's essential to keep it concise. Avoid using jargon or technical terms that your audience may not understand. Instead, use short sentences and simple language to convey your message. Use bullet points and headings to break up the text and make it easier to read.

3. Focus on Your Unique Value Proposition

Your unique value proposition is what sets your business apart from the competition. It's essential to focus on this in your business plan. Explain why your product or service is better than what's already available in the market. Show how you plan to differentiate yourself and capture market share.

4. Be Realistic

When writing your business plan, it's essential to be realistic. Don't exaggerate your projections or make unrealistic promises. Instead, focus on achievable goals and realistic timelines. Provide evidence to back up your claims and show that you've done your research.

5. Include Financial Projections

Financial projections are a crucial part of any business plan. They show how you plan to make money and when you expect to become profitable. Include projected income statements, balance sheets, and cash flow statements. Be sure to explain your assumptions and include a sensitivity analysis to show how your projections could change under different scenarios.

6. Get Feedback

Before submitting your business plan, get feedback from others. Ask friends, family, or colleagues to review your plan and provide feedback. Consider working with a business coach or mentor who can provide guidance and support.

By following these tips, you can write a compelling business plan that will help you secure funding and grow your business. Remember to tailor your plan to your audience, keep it concise, focus on your unique value proposition, be realistic, include financial projections, and get feedback.

Key Components of a Business Plan and a Pitch Deck

A business plan and pitch deck have different components that are essential to the success of your company. Here are the key components of each:

Business Plan

• Executive Summary: This section provides an overview of your entire business plan. It should be concise and highlight key points about your company, such as the problem you're solving, your target market, and your competitive advantage.
• Business Description: This section describes your company in more detail, including your mission, vision, and values. It also includes information about your team, your product or service, your target market, and your business model.
• Market Analysis: This section analyzes your industry and your competitors. It includes information about your target market, your competition, your marketing strategy, and your sales strategy.
• Operational Plan and Management: This section explains how your company will operate on a day-to-day basis. It includes information about your organizational structure, your management team, and your operational processes.
• Service or Line of Goods: This section describes your product or service in detail. It includes information about the features and benefits of your product or service, as well as any intellectual property you've developed.
• Sales and Marketing: This section explains how you plan to sell your product or service. It includes information about your sales strategy, your marketing strategy, and your pricing strategy.
• Money Request: This section explains how much money you're raising and how you plan to use it. It includes information about your funding needs, your use of funds, and your financial projections.
• Financial Estimates: This section includes your financial statements, such as your income statement, balance sheet, and cash flow statement. It also includes any other financial information that investors may need to make a decision.

Pitch Deck

• Introduction: This slide includes your company name, logo, and tagline. It's the first thing investors will see, so it should be attention-grabbing.
• Problem: This slide explains the problem your company is solving. It should be concise and clearly explain why your product or service is needed in the market.
• Target Market: This slide describes your target market. It should include information about your ideal customer, such as their demographics, psychographics, and buying behavior.
• Solution: This slide explains how your product or service solves the problem you identified earlier. It should be concise and clearly explain the benefits of your product or service.
• Traction: This slide describes any traction your company has gained so far. It should include information about your customer acquisition, revenue, and growth.
• Marketing and Sales Strategy: This slide explains how you plan to market and sell your product or service. It should include information about your marketing channels, your sales process, and your pricing strategy.
• Competition: This slide describes your competition. It should include information about your competitors' strengths and weaknesses, as well as how your product or service is different.
• Funding Request: This slide explains how much money you're raising and how you plan to use it. It should be concise and clearly explain why you need the money.
• Financial Strength: This slide includes your financial projections. It should include your revenue, expenses, and profit margins.
• Team: This slide describes your team. It should include information about your management team, your advisors, and any other key team members.

Keep in mind that these are just the basic components of a business plan and pitch deck. Depending on your industry and your company's unique needs, you may need to include additional information.

Conclusion

Both a pitch deck and a business plan are essential tools for entrepreneurs seeking funding for their ventures. While a business plan provides a comprehensive overview of a company's operations and financial projections, a pitch deck is a more concise and visually appealing document that seeks to excite potential investors about a company's potential. Understanding the differences and appropriate use cases for each document can greatly increase an entrepreneur's chances of securing funding and growing their business. By following the tips outlined in this article, entrepreneurs can create compelling pitch decks and business plans that effectively communicate their vision and attract potential investors.