10 Items That Will Insure Your Business Plan Is “Not” Considered or Seriously Read by Investors

I read business plans as a major part of my Consumer Product and Marketing Consulting business. I act as project consultant for several Venture capital firms. I am a Fellow and lecture at the Miami University, Farmer Business School Center for Entrepreneurial Studies. I teach students to write Business Plans. My consulting duties include preparing Business Plans for clients as they seek funding opportunities.

There is no definitive, 100% detailed methodology to construct these crucial documents. The internet, book stores and home study courses are full of turnkey templates that claim to lead to successful outcomes for projects. They do not.

In its simplest form a Business Plan is a document that quantifies (numbers, costs, financials), qualifies (due diligence, research) and narrates (tells an exciting opportunity story) a series of assumptions about the project on offer. The plans submitted for my consideration invariably do not meet the level of professionalism required to be considered for funding. Even if the product or project possesses real utility and commercial value, if the document is faulty it will not be fully read or considered.

There are many items that investors consider when reviewing a new Business Plan submission. Often the first read is handled by a junior partner whose only duty is to cull the herd, markup and forward only plans that meet firm standards. This means that about 98% of all newly presented Business Plans are never read or even touched by key decision makers. You do not want to be part of the culled herd.

Here are 10 items that are among the most crucial elements to avoid in preparing a Business Plan that will merit a thorough read, markup and full consideration by your investing targets.

1. Do not prepare a plan by following a standard download template. When I am approached by an Entrepreneur with a Business Plan I always asked if they prepared the plan and if they have ever written a Business Plan before. If the answer is yes I prepared the document and no I have never done one before I can rest assured that a form template has been followed.

A quick scan of such a document always indicates a fill-in-the-blanks approach. This screams lack of due diligence, thus lack of commitment. If you want the proper consideration your work deserves customize the plan and present it in professional form.

2. The Executive Summary MUST present a vivid, compelling, complete overview of the project. The first few pages of a John LaCarre or Vince Flynn novel grip the reader. The opening scenes in a Jerry Bruckheimer movie thriller absorb the viewer. Similarly, the Executive Summary is the window to the rest of the plan. If it excites the analyst it will prompt them to read on with relish.

3. Do not guess at financial elements. For a Consumer Product plan, which is my area of expertise, the most important number to nail is the dead net Cost of Goods to produce and land a product. Every other income and expense line item in the Financial Statement, Balance Sheet and Cash Flow (3 year NOT 5year) projections will be false if the true cost basis is not fully vetted.

4. If you cannot provide a management team, fully organized and committed, the project will go nowhere. We review too many plans that are presented by an entrepreneur who has no management experience in the space they are seeking to enter. No investor will commit funds to a project that is not staffed by experienced managers. People count as much as a product or concept.

5. What is the Unique Selling Proposition that your product or service will provide to retail stores, international distributors and consumers? In a cluttered, chaotic marketplace how will your offering cut through the maze and create demand? You must be able to detail and obvious point(s) of difference between your product and the raft of competitors you will face off against. You do not have to reinvent the wheel, but you must be able to improve or embellish the wheel.

6. Avoid bombastic pronouncements. This always results in a quick “deep 6″. Whenever we see outlandish claims we recoil. Whether in the financial projections, product performance claims or share of market detailed if the project is not supported with realistic due diligence it will go nowhere.

7. You are not fundable if your project does not provide a Return on Investment of a minimum of 30% per annum beginning between month 24 and 36 of full- operational activity.

8. You do not have a first mover advantage, but think you have a better mousetrap. Recently we reviewed a Skin Care and Cosmetic project. The owner claimed that his first mover advantage was a new ingredient story. He could not detail a product feature or benefit that was not already being addressed in the marketplace. The product will have to be the first to offer a niche application in its space.

9. Never confuse a large document with a thorough plan. A great Business Plan, unless there is a novel divergent technology or science involved, rarely exceeds 25 pages. Add as many supporting exhibits, competitive analysis, research documents, studies, etc. as possible. The main body of the document must be focused like a laser on providing answers to the many questions that investors always present. Keep it tight and moving.

10. If your Business Plan is built on false assumptions it will not withstand scrutiny. Remember you must be able to fully support every assumption you make about Cost of Goods, Marketing Strategy, Sales Models, Competition, Expenses, Financial projections, etc. This requires research and due diligence that will be apparent, or not, to the potential investor.

A great Executive Summary will contain referrals to almost all of the elements detailed in this article. It will be pithy, interesting, grounded and written with professional zeal, not bombast. If this two-page introduction is crafted properly your Business Plan will have a real opportunity to receive a serious read from your real target audience: Venture Capital, Investment Bankers, Strategic Alliance partners and Licensees.