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Business Plan Readers No Longer Believe the Hype

Posted by: Rod Kurtz on March 20, 2009

As investors and lenders continue to tighten their purse strings, it is more important then ever for small business owners seeking capital to create credible business plans.

What business owners don’t realize is that investors and lenders are bombarded with business plans filled with hype. Take a look at your business plan. Does it include tons of superlatives like "amazing," "fastest," and "best," or phrases like "unbeatable management team," "first mover advantage," or "no competition"?

It is acceptable to use these words and phrases, albeit sparingly, but only if you can back them up. If your market size is expanding rapidly, cite third-party market research that proves this. If your management team is "world-class," explain its specific accomplishments it so. If your product is "the best," then provide a side-by-side comparison vs. the competition. Importantly, cite third-party research proving that customers truly care about the features in which your product or service excels.

You generate credibility by validating each of your superlatives. And by fostering credibility with investors and lenders, your chances of fund-raising success will skyrocket. Conversely, without credibility, your business plan will simply be discarded.

Dave Lavinsky
New York

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