Monday, June 22, 2009

Business Plan Faux Pas

So you want to start a business? Well now’s the time to do it. According to a recent Wall Street Journal article, an economic downturn provides ideal conditions for becoming an entrepreneur. Low costs, talented individuals and prospective clients are abundant and available. Now all you need is an idea, a product, a team, and…a business plan. Unfortunately, poorly written business plans can make or break your entrepreneurial dream.

In his article, “Why Business Plans Don’t Deliver”, John W. Mullins reveals the five most common flaws found in business plans. Not only does Mullins accurately describe the flaws, he provides suggestions that will prevent business plans from facing a quick scan and toss into the recycling bin.

The first mistake addressed in the article, Mullins refers to as the "Here I Am Never Mind The Problem" flaw.

“In this kind of plan, the writer is smitten with the elegance of his or her technology. The plan begins not with the identification of a customer problem to resolve, but with a detailed explanation of how the technology works, why it is cutting-edge or state-of-the-art, and how it is better, faster and cheaper than current solutions.”

Just this weekend I told my dad I wanted to start a business. He began questioning me, asking what it was I wanted to do, why I wanted to do it and how my business was going to solve a problem. As I stuttered an unintelligible response he cautioned me with these words: “Don’t start a business just to say you did. You need to be passionate about it and you need to have a product that will solve a problem.” Of course he was right. Too many companies fail, because they are absorbed in the amazingly innovative technology they have. However, if they are unable to apply the technology so it has consumer appeal they won't be successful.

Mullins continues to explore the four other flaws and reveals many business plan "dos" and "don'ts". In the following Prendismo clips various speakers discuss the importance of a business plan and how a successful plan should be written. Essentially, a good business plan must be clear, clean, concise, and realistic.

"But, the first thing you look at is that executive summary, if that doesn't catch the eye and if that doesn't sell the story I don't go any further." - Richard Saltz, Principal, Business Innovative Strategies, Int.

"You rarely hit what you don't aim at." - Sharon Dauk, Founder, Dauk/Wagner Investments

"Sell the deal - that's probably as much as I'm going to read." - Anita Stephens, General Partner, Opportunity Capital Partners

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