The 5 most common flaws of a Business Plan
- Here I am, Never Mind the Problem
- A Coke for Every Kid in China
- Just Look at our (Paper) Profits
- Our Team Walks on Water
- Everything is Wonderful
Excellent insight from a LBS Professor:
This gambit rests its case on a plethora of secondary data to show how large and fast-growing a market is. The plan then makes a heroic leap and assumes that the new venture will grab X percent of that market—it could be 1%, 10%, 30% or whatever. “Surely,” the plan argues, “with the large number of customers in our market, we’ll easily get enough. We only need a small fraction to have a very nice business.”
Such business plans often contain detailed spreadsheets showing why the numbers would work. That’s why these kinds of plans are difficult to spot—the numbers look like they work. As one entrepreneur told me, “With a couple of beers and an Excel spreadsheet, you can make a lot of money in no time,” or so it will seem. While consumers certainly liked the idea of having Fido’s dog food delivered, they were not prepared to pay a price that would enable the economics to work.
Plans that succeed in attracting capital often include one or more members of a team who have failed in a prior venture. When that failure is accompanied by lessons learned, it’s often viewed, as one investor told me, as “an education on someone else’s nickel.”
Plans that succeed in attracting capital often include one or more members of a team who have failed in a prior venture. When that failure is accompanied by lessons learned, it’s often viewed, as one investor told me, as “an education on someone else’s nickel.”
And the Telltale Terms when business plans fail to deliver:
- Huge
- Conservative
- Revolutionary
- Assumptions
- We believe…
- No competition
