Monday, November 10, 2008

Common problems with business plans.

The business plan is too long.

When writing a business plan, I suggest keeping it under 20-pages. In fact, the shorter the better. The Intel business plan was one page long! The Sun Microsystems business plan was three pages long! Really long business plans scare people off and often don't get read. When you present it to potential investors, your presentation should have no more than fifteen slides.

The concept is unclear.

Use plain language to describe your business. Don't get caught up in technical jargon. Most great businesses are based on simple concepts. Write the plan so a smart college student could understand it.

The plan doesn't include customer input.

Who are your target customers? Have you factored in their input? You can conduct phone or Web surveys to quiz prospects about your concept, then summarize the results in your business plan. This shows potential investors that you talked to real prospects and incorporated their feedback into your thinking.

The competition section is weak.

Many entrepreneurs simply state they have no relevant competition. This is rarely true. Frankly discuss the strengths and weaknesses of your competitors and make sure to spell out how your company will differentiate itself from them.

The team description is too brief.

Many people invest largely on the strength of the start-up team. Show investors what the founders have accomplished in the past and why they’re uniquely qualified to make this venture successful. Be sure to include advisers and consultants who will actively participate if the company gets funded. Potential investors want to know who they’re dealing with before they commit their money.

I’ve been told that fewer than six out of one-million business plans submitted to venture capital firms ever become public companies. So, make the effort and take the time to prepare the best business plan you possibly can so you'll end up as one of the six!

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