As you'd expect from someone that’s run business competitions, I'm a big fan. And I'm not alone. Not only have business plan competitions continued to thrive and proliferate — innovation, accelerator, and bootcamp programs often select winners and give out prizes. 

When I first took the reins at Great Lakes Entrepreneur's Quest in 2010, I firmly believed the value of our entrepreneurial education programs far exceeded the dubious value of awarding cash to contest winners. But I was wrong — I missed the big picture.

I had my eyes opened when I met Bob Skandalaris, one of my board members. Bob is a remarkable Michigan-based entrepreneur, author, and philanthropist. He wrote, "Rebuilding the American Dream; Restoring American Jobs and Competitiveness through Innovation and Entrepreneurship." He was the founder of Noble International Ltd. and Quantum Associates, among other companies, and responsible for establishing the Skandalaris Center for Entrepreneurial Studies at Washington University in St. Louis. A key driver in the success of the WU program is (surprise!) the Skandalaris Cup (formerly the Olin Cup) Business Plan Competition.

Here's what I learned in my first meeting with Bob: Big Prizes are important, but not for the obvious reason. It's not because $100,000 helps a start-up more than $5,000, although it does — it's because big prizes get attention and trigger a positive cycle of activity. I know for a fact he was right. We added the $100,000 SmartZone Award in the GLEQ Business Plan Competition that year — eclipsing our previous high award of $25,000. More than 300 entrepreneurs participated in the competition, up from 175 in the previous year. More and better plans led to more engagements with coaches and mentors, more attendance at educational and networking events, more interest from investors, more support from sponsors, and more publicity. We saw more deals get done — leading to even more participation on all fronts next time around — and ultimately, a healthier startup economy.   

Done right, with a strategy to use a contest as part of a more comprehensive ecosystem of entrepreneurial support, business plan competitions work on multiple levels. They work with human nature. We love to win money and have our ideas validated. Entrepreneurs are drawn to competitions, because they're passionate about their ideas, believe in them, and want to win ‘free’ money to take them forward.

Deadlines spur action. Consider this...at 8 a.m. on the last day to sign up, 182 entrepreneurs were registered. At the 5 p.m. deadline, there were 302. Those 120 entrepreneurs did not discover the competition that day. They took action when the deadline was looming.

Contests are also a clever marketing gimmick. You don't have to spend a fortune to get the word out about all the programs, organizations and events going on in your region. Which is a huge challenge, because there are a lot — and the names are confusing (CIE, SBTDC, SBCs, NEW, NCBC, to name a few). When you have cash awards — word gets around. 

There are plans in the works for a new competition. When you hear about it, don’t think ‘frivolous’ — think ‘great way to accelerate startup success’.

Diane Durance, MPA, is director of UNC Wilmington's Center for Innovation and Entrepreneurship (CIE). The CIE is a resource for the start-up and early-stage business community to help diversify the local economy with innovative solutions. For more information, visit www.uncw.edu/cie.