Competitive Analysis and Forecast Faux Pas

We receive several business plans each week drafted by others, including business owners/entrepreneurs and so-called experts, often falling into the trap created by faulty templates and software when Googling “business plans.” The first major issue that arises almost all the time is insufficient market and competitive analysis, critical to supporting the business plan let alone revenue assumptions. Forecasts very often do not include a month-to-month worksheet to better establish a true break even point and virtually never include the type of detailed Notes and Assumptions that allow the reader to easily understand versus letting them assume that these assumptions have been pulled out of thin air. In speaking with bankers, SBA officials and private investors, these items doom business plan submissions most often. The other item that commonly creates issues is the lack of a true Executive Summary versus an Introduction only within a business plan disguised as an Executive Summary. The Executive Summary gets you in the door for submittal of a complete business plan.

For many business plans with a national marketing focus or web site based, we often suggest completing the market analysis first since a strong market analysis sets the table for appropriate forecast assumptions and therefor a viable business plan. In addition, we are often asked to complete forecasts or budgets for existing companies since our detailed and easy to use and manipulate worksheets are so well received by lenders.

As a reminder, we can help with developing business plans or operations and offer a free consult. Contact us at tim@thebusinessplanconsultants.com.

Business Plan Procrastination

As readers of my Blog are likely aware, I do my best to keep in contact with those that have approached my company about their business plans। We receive some 20-30 inquiries each week and have well over 1,000 contacts in our database of entrepreneurs and companies. With 400 lenders and investors in two other databases, we keep in contact in that realm as well so have a good to great sense of trends in business...and in business minds. Many of us procrastinate in general, I do with my diet and others in their personal life, just like entrepreneurs and business owners with their business plans or aspects of their plans. Last fall, many put their plans on hold due to the crisis on Wall Street and the economic environment, and that made sense at that time for many businesses. The economy is still imperfect and yet despite the likelihood of increasing unemployment, further bankruptcies in the retail sector and other factors, there are positive signs.

It is clear that we have not quite bottomed out. That said, it is equally clear that the bottom is only months away and recovery is in process. When the economy has rebounded in all sectors, every Tom, Dick and Harry (saying my father used to say!) will be jumping on the entrepreneurial bandwagon. For the procrastinators in most businesses, their opportunity will then evaporate. Now is the time to seize the day and become proactive versus remaining inactive. If your business plan is being implemented, do so on a more aggressive basis with increased marketing effort soon or in the very near future.

A free consultation tim@thebusinessplanconsultants.com is available on your business plan.

Business Plan Transparency

We receive at least a couple of draft Business Plans each week, all too often completed with faulty templates that will go unnamed and have been the subject of prior Blogs. The overwhelming majority of Business Plans we receive lack transparency, namely supporting detail to back up statements. One example is stating that “we have invested in the company” without also including how much, both an itemization of cash and of time of the principals and key employees, either as an Appendix or offering said document to interested parties. A second example would be supporting documents or mentioned sources for marketing plans and therefore critical revenue assumptions in Forecasts, including specific examples, either within the Plan or as Appendixes, of sales contracts, potential contracts or other documents that suggest your ability to achieve sales as more than just talking the talk but indeed walking the walk. Confidentiality is no more than an excuse since names can be removed from documents and20still be used as Appendixes with a statement in the plan that clean copies can be provided upon expressed interest in the Business Plan.

SBA, angel investors and venture capital firms may be three extreme examples of options for funding, but they all have a couple of things in common. First, they receive lots of plans for consideration and second, if you make it easy to both understand your business and provide advanced due diligence in the form of transparency, your Business Plan has a great chance to not only get to the top of their pile but also get their approval versus the unfortunate alternative….the trash can.

We provide a free consultation on business plans and can help take your plan to the next level in transparency and detail. For more information, contact me at tim@thebusinessplanconsultants.com.