Entrepreneurs have just five days left to enter the Northeast Wisconsin Business Plan Contest, and Ryan Kauth, event administrator and lecturer of entrepreneurship at the University of Wisconsin-Green Bay, recommends going for it.
Kauth, a Green Bay SCORE mentor, says that the format for the initial entry is condensed and that the rest of the plan can be developed prior to the next round. There are four categories — product description, customer definition, market description and competition — with a limit of 250 words per category.
“Going through the process forces an entrepreneur to move an idea from their head and to be able to communicate it by word, and orally, if he or she makes the finals,” Kauth said. “It also forces them to do research on their potential customers, users and buyers. This is no longer the age of 'protecting' your idea but telling no one about it and doing nothing about moving it forward.”
He said some people hesitate to enter competitions because they are afraid someone will steal their idea. That is a misconception, and something that isn’t an issue. Instead, he suggests talking to targeted individuals to prove that a concept makes sense.
“Interview 100 potential customers with unbiased questions and see if it is actually a problem, and if it is a problem, whether or not it needs solving, and finally, would they pay for it,” he added.
A problem that many entrepreneurs have is falling in love with an idea and being unwilling to test it with solid research. They fail to validate the idea and determine if it is actually good. Kauth says the four categories provide a good start.
The product description requires a summary of the product or service and the value it will provide a customer, user and buyer.
The customer definition means knowing who your customers are and how you defined that. Kauth says that the interview process helps narrow this down.
The market description requires truly understanding that target customer and digging deeper. Kauth says there is a library full of market research reports on the industry that your business is in. You can find statistics on the total size of a market, the segment you are concentrating on and what can be expected as a realistic market share.
“A realistic market share should take into consideration competition, trends, geographical distribution, sales channels and the like,” he said.
The final category, competition, should include an understanding of direct and indirect competitors.
“When it was Coke vs. Pepsi, it was easy," Kauth said. "But, now it’s Coke vs. Red Bull and Lipton and Aquafina and Tropicana. ... That is compounded by the fact that it is really hard for you and I to change our habits to buy something new.”
While this might sound complicated to a startup, it is interesting to note that about half of the entrants in the past have been those with an existing business that are adding a new product or service, expanding a market area or planning other changes.
“Shouldn’t you write a business plan when you are growing?” Kauth asked. “Isn’t growing a business a risk too great to pursue without one? It comes with its own challenge, just like a startup has — financing, cash flow, hiring, keeping up with demand, sales, operations … and the cycle continues.”
Details about the contest are at https://newbpc2018.startupcompete.co and those who make it through Round 1 will be invited to participate in Round 2, the full business plan judging round. Top entrants will be able to compete for free business services in a pitch contest Nov. 30. In next week’s column, a past business competition winner will talk about the benefits of entering contests and importance of a business plan, something Kauth strongly believes in.
“It is still about half of small business owners who actually do write a business or strategic plan or even write down their goals," Kauth said. "How do you know if you are making progress on your goals if you have no goals written down to start with?”
Tina Dettman-Bielefeldt is co-owner of DB Commercial Real Estate in Green Bay and past district director for SCORE, Wisconsin