Business is about competition—for customers, for market share, for employees and yes, for financing. When you are looking for capital to launch or expand your venture, you are likely to be tapping the same sources as millions of other entrepreneurs. Lenders and investors are looking to answer just one question: Which of these entrepreneurs have the best ideas, and are most likely to make my loan to or investment in their businesses pay off?
Business plan competitions boil this concept down to its essence, identifying a group of entrepreneurs and inviting them to literally compete for the capital and expertise they need to take their business idea from concept to reality, or their venture to the next level. These competitions now include those sponsored by university business schools (the originators of such contests), others funded by major corporations looking to identify new suppliers, and reality TV shows such as ABC’s Shark Tank. Nearly all of these competitions require you to submit yourself and your business plan to the scrutiny of business experts, financiers, bankers, accomplished entrepreneurs and others who will decide which business ideas are worthy of investing in—and which are not worth the paper the business plan is printed on. While the most obvious incentive for braving these competitions is a major cash infusion for your business, even more valuable is the chance to gain access to expert advice and business contacts that might otherwise be unaffordable or inaccessible to you as a new entrepreneur.
If you have a great business plan, the ability to effectively articulate your business model, and the courage to face merciless criticism and even cold rejection, business plan competitions could be a great source of funds for your business.
ABC’s Shark Tank: The producers of the new ABC reality series Shark Tank are on “a nationwide search to discover the next successful–and possibly wealthy—entrepreneurs, inventors, businesspersons, dreamers, promoters, creators and innovators.”
In each episode, aspiring entrepreneurs are given the unprecedented chance to convince a panel of business moguls and potential investors (the “sharks”), such as FUBU Founder Daymond Johns, to provide the financial backing necessary to bring their business concepts, products or services to the marketplace—in return for an equity stake in the ventures. A really hot idea could prompt a “feeding frenzy”, causing the sharks to compete for the chance to invest by bidding up the level of financing offered.