Pitch deck vs business plan: which one do you need for your business and when?
As a businessman or entrepreneur, does it confuse you sometimes why your potential investors are not responding after you have sent them a long and detailed business plan or a catchy pitch deck?
This can either be because of the minimal information you provided in the pitch deck or the lengthy list of boring, irrelevant details in the business plan that repelled them from reaching back to you. But maybe you should also understand how to send pitch decks to investors.
Therefore, it is crucial for an entrepreneur to understand which of the two approaches will be 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, and luckily for you, we have all the information you need.
Pitch Deck vs Business Plan
What is the definition of a pitch deck and business plan? How do you write these and what elements to include in each? Let’s find out:
Identification, description, and analysis of a business opportunity and/or an existing business are all goals of a business plan that focuses on the technical, financial, and economic viability of the idea. The plans your company has for the next 1, 3, and 5 years are all explained in detail in this document, and it is used as a reference point by potential investors when deciding whether or not to invest in your company. Moreover, it is also frequently used in a due diligence step in the funding process.
When all of the necessary information is included in the business plan, people wonder what the purpose of a pitch deck is.
Well, a pitch deck 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.
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 the 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 traditional business plans 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
Sounds like a lot to consider? It is. Many business plans are not very proffesional and thus, don't have real added value for the business. It's highly recommended to use a business plan consultant.
On the other hand, a pitch deck usually covers the following sections:
- Target market
- Marketing and sales strategy
- Pitch Deck Competition Slide
- Funding request
- Financial Strength
You 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.
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.
Whereas 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: The 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 lot 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: As mentioned before, a pitch deck is a conversation starter that encourages the investor to get in touch with you. You can email the PDF file to them or send them a printed copy to start building a relationship with the investor.
- Pitching in a Competition: In the startup community, there are many pitch competitions and events that are organized to 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 will help effectively communicate the start-up plan.
- Seeking Equity Funding: You need a clear pitch deck if you are looking for funding from venture capitalists, angel investors, or knowledgeable friends and family.
What to Write First - Business Plan vs Pitch Deck?
A business plan is a fundamental document written at the initial phase of a business and updated as your business develops and your needs and goals change over time. This lengthy document can be useful for a variety of purposes, including internal use within the company or even in banks that still require business plans for loan applications today.
Moreover, the business plan document can also 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. It is much easier to get depth and length in your plans if you have a business plan prepared, which eventually results in more clarity and strong points that you could include in a pitch deck. The time-consuming part of research is already completed when writing a business plan, which allows the pitch deck to concentrate on composing the already-existing information in such a manner that encourages the investor to approve the funding you need.