Business Plan

Yet, so many failed business plans appear each year on the desks of willing investors. It could be a great idea but the potential is not reflected in the plan. Business plans should go through several drafts before even considering that it may be ready to convince an investor. It is the tool that invites the capital on board to launch the business. Banks will be more than happy to shelve a good business idea if the plan does not convince enough. It is a sad thing when the entrepreneur feels that a great deal of time and excruciating effort has gone to waste.

Here follows a list of DONTS whilst thinking on the business plan layout, the real negatives in the business plan creation process:

1. It is all about the money. The business plan should not be defined by its ability to attract money from the lender. Be passionate about the business operation, and the future aspirations attached to it. The lender needs to be excited.

2. Time to prepare a lengthy presentation to impress. Wrong, length does not dictate a good presentation. The first slide should introduce the title; the next slide should outline the business premise. Each slide should contain no more than three to four points and each slide should flow into the next slide seamlessly. It doesn’t matter if it is twenty minutes, one hour or a whole afternoon, tautness is the most important factor, do not bore the investor with waffle.

3. No need for research, the business is easy. If no research is conducted to extract the most salient points of the business plan, a competitor will find those facts and use it as a competitive advantage. An investor will back away following that critical mistake. Speak to competitors about how they run the show. Do the qualitative research bit very well and make lots of notes about the industry being tapped. Remember, knowledge is power.

4. The company will be the largest of its kind in the world. Do not make bold statements that profess that the business will be a huge player from the word ‘go’; even if it is known that an early success is predicted. That is a prediction. Investors will not be interested in predictions, they want hard facts. Make a clear objective that is both achievable and realistic for the fledgling business. 5. The product is unique. This has been witnessed on many occasions, the biscuit with a secret ingredient or the drink with a revolutionary taste. That’s up to the consumer, not the business to decide. Don’t tempt the Pepsi challenge approach on an untested product. By tested, that means to say that a market of great magnitude has come to the conclusion that the product is undeniably different. If a clever advertising angle can be played off the back of the business plan, for example - Ariel washing powder supports the environment by being able to wash clothes at thirty degrees enticing people to turn their washing machine temperatures down. Unless a gimmick exists, forget the unique or niche market approach. Where niche markets are concerned, the product would need to possess qualities unknown to the industry and not be an unenviable copy of another brand.

6. This is the best product in the industry. Ok, but why?? If the answer to why is strong, filling a gap in the market, fine, it could be the best. Do not just use almost fictionalised leverage to place the product on a pedestal. Bad examples are telling investors that they are guaranteed to make a profit. Are they? They should know? Well, no but be sure of one thing, if they do not think do, its no money time. They will not part with their hard earned cash off the back of a pretentious statement. Always support any aspect of the product salient areas.

7. The loan will be paid off soon, do not worry. Yes, worry. What is the cash flow in the first year? How is the profit going to be made? It’s a known fact that a lack of what is known as an exit strategy is one of the top reasons why an investor will pull out. They need to be assured that the loan will be paid, that the business will break even and a profit will be made.

Hopefully this has enabled a better understanding of some of the worst mistakes made by entrepreneurs trying to get that first slice of the funding cake. No one out there will just give someone money. That only happens if the lottery comes through or a huge trust fund is paid out. A business plan is like a movie script treatment. If a film producer hates the movie idea, the script will not be read no matter how long the writer slaved at the story. It’s the same for a business plan that fails to impress the lender.