Tuesday, June 23, 2009
Dos and don'ts of business plans
No job? How about a business?
Writing in the WSJ, John W. Mullins has some excellent advice on writing a business plan. Of course, you already know it’s not on the back of a napkin, right?
Check it out:
A downturn is a good time to start a business. Hey, there are people available, clients may need a new supplier, and so on. I once heard a guy say he wanted to start a trucking company because so many had gone out of business there should be work. Uh…gone out of business…is that a clue?
You need to be clear..convincing. Those with money are picky these days.
Most business plans, Mullins says, don’t make much of an impression. Here are five types of plans destined to sink without a ripple.
Those that don’t identify a customer problem and instead focus on the wonderful technology being proposed.
Those who show a large market and say they only need a part of it. It’s easier to win a large share of a targeted market and investors know this. A new large market also needs distribution systems and lots of marketing.
A plan where the profits are paper profits. Take pets.com—it looked good, deliver the food to the home—but the logistics killed it.
The team that can walk on water raises flags. You need to show you can handle critical success factors, such as location in retail. Even a weakness in the team could be a strength—if you ask the investor to find the right person for it.
If everything in your plan is wonderful and sunny and you don’t identify any challenges, this is an uh-oh. ID your rough spots.
Some words to avoid: "Huge"--our market is huge—how huge, do research. "Conservative"—as in “we conservatively forecast." "Revolutionary"—as in our product is. How does it really differ from what’s out there? “We believe” is also a substitute for research. “We have no competition.” Yup—you do. Actually, competition can mean the need is so real others are going after it.