Top Ten Mistakes in Business Plans

Quoted from Bill Joos

1. Too Darn Long

Most VCs have ADD (Attention Deficit Disorder)
Elevator Pitch: < 1 minute - Don't bore anyone!
Executive Summary: ideally 1 page
Slides for VC meeting: ~12
Business Plan: < 20 pages - Don't believe in thud power (of dropping a heavy business plan on the VC table)

2. Poor Positioning

Presenting technology solutions looking for a problem/ customer pain
Not addressing a real pain - The product/service you offer should be a pain killer
No real customer validation - You need to validate/ vet out the idea with your potential customers first
No "So what" benefits / frame of reference (There are usually 3-5 of these in a VC meeting of 60 minutes!) - Explain your points: What is the big deal about that?

3. Lack of Tight Focus

"Swiss Army Knife" Plans / Addressing multiple markets - If you are going to approach different markets, time phase these
No phasing of multiple opportunities

4. Not Enough Real World Market Focus

Top Down vs Bottom Up Plans
- Top Down: Study xy says market abc will be this big by 2020)
- Bottom Up: Have in depth market knowledge in your team, have talked to people, have study to back up your assumptions - Far more credible!
Illogical growth rates - Don't over-use Excel and don't just believe in spreadsheets! Note: Relate to Business Planning software, e.g. at Launch
Showing the overall market instead of the reachable market

5. No Business "Cockpit Gauges"

Should be able to answer: What are the top 3 things that are going to drive your business? (About 50% can't answer or have too many things!)
Distinguish "Must know" vs "Nice to know"

6. Unclear Business Model - This relates directly to your credibility: You have to show how you will make money!

No clear path to profitability
Oblivious to sell + budget cycles - These are a lot longer and laborious than you'd think!
Not showing how exactly you'll make money
Focus on revenues instead of assumptions
Oblivious to adoption or implementation of timetables - Remember that VCs want to see clear structures
Too dependent on others accepting or cooperating with your business - e.g. Apple will want to use our services (-No they won't, their planning for the next 2 sell cycles is done!)
No being scalable (If you are only going to sell to companies you've worked for or have insiders in first, you have to realise that these first sales are a lot easier than the following.)

7. Poor or Incomplete Competitive Analysis - Always remember: VCs will definitely check your analysis!

Not clearly distinguishable or defensible from competition - Don't just be a "me too"!
Not disclosing everybody
Not realising the of power of your status quo (somebody is already doing the same business) - Show how your business is better / Displacement sales

8. Weak Team Information - VCs would rather take a B idea with an A team than vice versa! - Make them understand your thinking

It is the team, stupid (?)
Not leveraging the prior skills
Not admitting your holes - Have a plan how to fill areas where your team is lacking and also consider that this is where your VCs can help

9. Poorly Defined or Weak Go To Market Plans

Unclear attack plans
No assigned responsibilities of ownership - VCs can get the right people for your team!
No leverage points - Who besides you has invested interest in your success?

10. Goofy Fundamentals That Distract

Not doing the basics right (e.g. capitalisation through family) - VCs price your stock, don't just give away equity!
No obvious "adult supervision" - Find yourself a mentor or board of advisors
Not using specialists
Not looking like a "standard deal" - Follow the recipe for entrepreneurship!