Top 10 Reasons that Businesses Succeed

1. The experience and skills of the top managers.

2. The energy, persistence and resourcefulness (the will to make the business succeed) of the top managers.

3. A product that is at least a cut above the competition and service that doesn’t get in the way of people buying.

4. The ability to create a “buzz” around the product with aggressive and strategic marketing.

5. Deal-making skills to sell the product at the highest possible price given your market.

6. The ability to keep developing new products to retain and build a customer base.

7. Deal-making skills to work with resource suppliers to keep costs low.

8. The maturity to treat employees, suppliers and partners fairly and respectfully.

9. Superior location and/or promotion creating a connection between your product and where it can be obtained.

10. A steady source of business during both good economic times and downturns.

What a Business Plan Isn’t

Because a business plan is a sales document, it is intended to sell the reader. It isn’t intended to sell the writer. Be realistic about what to expect from a business plan. A lot more planning and thinking is needed about the business than you can find in the business plan. Some important things to remember:

• Don’t expect a finished plan to be a roadmap of everything you need to do to have a successful business. That isn’t the purpose of the business planning process. A traditional business plan is intended only to document your strategies for the business very briefly – but well enough to get funding. If you are hoping for something that will tell you how to market or how many people you need to hire, you will have to start with a deep strategic planning process, and probably buy lots of consulting time to get you going.

• Don’t expect a great a business plan from a poor business model. If your costs are too high to make your business profitable, the business planning process will help you discover that. Then it will be up to you to make the hard decisions about changing your costs structure to make the business work. The business planning consultant is a skilled professional, not a miracle worker. A good business plan can help you highlight your strengths and minimize your weaknesses, but it cannot make an poor business model into a thriving business.

• Don’t go on to start a business or make changes in your current business if everything in the business planning process tells you it won’t work. Things don’t get better out in the real world if they don’t work on paper. Deal with the weaknesses – get more training, consider product redevelopment, or have a home-based business to reduce costs until you can sustain the rent for an office. Businesses fail finally because they’ve run out of money. If your plan tells you that you can’t make enough money to make the business work for the long run, pay attention to that reality.

Top 10 Mistakes Made in Business Plans

1. Not proving that you have the management expertise to make it happen. The quality of your people will lend credibility to your ideas and even to your financial projections. If your management team is not as strong as it could be, join forces with a great board of advisors.

2. Not demonstrating where your revenue will come from – what customers pay you and why they pay you. Don’t be too aggressive in setting revenue projections or you will undermine your credibility.

3. Not proving that your business model and long term cost structure is good enough to make a real profit. How will your business make money – what is your margin structure, what are your costs?

4. Not being clear enough in your product description to allow the reader to quickly see the need and the niche for this product. It may seem obvious to you, but not so to the reader not educated in your business.

5. Not proving that the market opportunity is big enough to get interested in. How big is your market now and what will it look like in 5 years?

6. Not adequately acknowledging your competition. Investors know that if there is no perceived competition, there may be no market for what you are offering. The better you can describe your competition, the better you understand your market, and the more likely you will dominate it.

7. Not writing for the target audience. Although the core is the same, the plan should be written for the perspective of banks, equity investors, and others. Go as far as you can to tailor each plan to the audience’s specific interests to show you’ve done your homework and know to whom you are talking.

8. Starting with a boring, unenthusiastic executive summary. This is the first section to be read, and if it isn’t exciting the rest may never be seen. Make it fun and be enthusiastic. It should stand alone and generate interest for more. It deserves all the thought you would put into a professionally done promotional piece for your customers.

9. Poor presentation. If you have typos and grammatical errors in your business plan, the reader will assume the work you do in your business is sloppy too.

10. Saying too much. Keep the entire plan to a maximum of 30 pages, with an executive summary of 3 pages or less. If investors are interested, they will ask for any other information they need. Amateurs talk in the business plan about unimportant details because they don’t know what they should say and what they shouldn’t. Hire a professional editor to reduce the page count and help you emphasize your strengths.