Recently I wrote why business plans are important when you think about starting a company. OK, having a business plan doesn’t automatically mean you have a good business plan. What most often makes a business plan a piece of crap?
1. Undiscovered environment.
You haven’t checked competitors and products which exist on the market. You think you’re unique but you haven’t really checked. You can end up with a great plan to discover and conquer virgin land. Unfortunately it’s already overcrowded. This is by the way the major reason why my last business plan sucked.
2. Business model not clear.
There are people out there who are your potential clients. Do you know how to reach them? And when you reach them do you have a plan how to convince them to pay for your crap… I mean product? This is a tricky part for technical people because it usually takes some marketing to achieve a goal. And we don’t even like a sound of m-word, do we?
3. Price as differentiator.
If the only thing which differentiates your product from others is price, well, as far as you don’t own a factory in China that’s a problem. Price is the easiest thing to be changed by your competitors. They can kill you in a couple of months and don’t even sweat.
4. Made-up numbers.
In every business plan you need some numbers. You can make them up on the fly. “We’ll have $100,000 costs so we need $150,000 income. Let’s write it down. Looks fine.” Sure, it looks nice indeed. However you can expect a visit from Mr Reality who will adjust your income plan a bit. He’ll take away 0 here and 1 there and your real numbers will suck.
5. Personal bias.
When we play with our own idea most of the time we aren’t objective about it. We imply everyone would use the service/product/whatever because we’d use it. That reminds me an old discussion with a friend “would you pay more for a taxi if you were guaranteed a taxi-driver was nice?” I would, but somehow I’m yet to see a taxi company which would use “we’re friendly” as a slogan.
Whole Entrepreneurs Time series.