A business plan is an essential element in getting funding for a new business. Entrepreneurs show their plans to venture capitalists, angel investors, banks, and even friends and family in the hopes of raising capital. But there's one source of financing that most entrepreneurs neglect: business plan competitions.

Business plan competitions offer new entrepreneurs the chance to earn fame and startup capital. There are more than 50 business plan competitions in the United States, many of which offer startup capital to the winner.

The best known competition is Moot Corp, started in 1984 at the University of Texas by two MBA students who wanted a challenge similar to moot court in law school. They envisioned a competition in which MBAs working in teams would conceive an idea for a new business, develop the idea into a written business plan, and present the plan to a panel of judges consisting of entrepreneurs, venture capitalists, accountants, lawyers and management consultants. Moot Corp soon expanded into a national and then international competition.

The contest with one of the biggest prizes is the $100,000 competition sponsored by the Massachusetts Institute of Technology. Other high-profile schools, including Harvard Business School, Duke University, University of Chicago and Wharton Business School, host competitions open to teams with at least one member that attends their institution.

A growing number of competitions are open to entrepreneurs with any affiliation. Industry-specific competitions exist for technology-based ventures, as well as businesses focused on seniors and other niches. Internationally, there are competitions for entrepreneurs in Asia, India and Canada.

A great source for finding out about competitions is the Business Plan Competition Directory at SmallBusinessNotes.com. In addition, local business schools have information about any contests they sponsor.

Moot Corp and its imitators are far from moot. Many business plans entered in the competitions become blueprints for actual companies. 1-800 CONTACTS, a mail-order contact lens firm, won the contest put on by Brigham Young University in 1995. Today, the company has annual sales of nearly $250 million.

For many fledgling businesses, the experience can be more valuable than the prize. Ampersand Art Supply, an art supply distributor, won the University of Texas plan competition in 1993. Their presentation impressed one competition judge so much he invested $300,000 in the company. WebLine Communications Corporation, an internet technology firm, won the MIT competition in 1993. In addition to the prize, founder Pasha Roberts eventually raised more than $8 million from investors impressed with his plan's finish. Even business plans that don't win benefit from constructive criticism from the judges.

David H. Bangs has worked with small business owners for 20 years. He has experience on both sides of the financial table, having been an entrepreneur and a loan officer for Bank of America. He is the founder of Upstart Publishing and author of Business Plans Made Easy and Nonprofits Made Easy.