April 13, 2011 –
Greenberg: “… you need to know this stuff cold.”
What not to do was the theme of the final talk in this year’s TechPortal-Entrepreneurs Forum series. Corporate attorney Bart Greenberg, who represents entrepreneurs, startups and emerging technology companies, shared the most common mistakes found in business plans, while explaining how best to avoid them.
Greenberg began by outlining 11 components common to most business plans. One-by-one, he detailed the minefields well-meaning entrepreneurs often stumble into, showing sometimes-humorous examples that had crossed his desk.
Among his key suggestions:
• Executive summaries should be needle-sharp, focused and to the point. Don’t fail to outline the terms of investment and don’t get too involved in the details of the product or service. “You’ve got to tell the investor how the investment will be used, how you’re going to make money and how you’re going to get [their investment] back to them.”
• Don’t make mission statements boring, regurgitate a business description or claim to be something you aren’t.
• When describing products and services, don’t use jargon or technical language and be sure to identify market benefits. “If you can’t convince me that there is a pain in the market that you’re solving, I’m not going to care,” he said.
• Don’t assume an improved product will sell itself. Being cheap and good-looking is not enough.
• When constructing the industry analysis section of the plan, be sure to demonstrate a solid understanding of the industry and how it functions. “Don’t assume a ‘build it and they will come’ attitude,” Greenberg urged. Know the industry’s major players and be aware of its competitive, distribution, relationship and public relations aspects.
• Don’t target too many markets at once. Niche markets are significant and can provide an important base that can be leveraged into success in other areas. Don’t assume lower prices lead to increased sales and never underestimate the importance of packaging, brand name and reputation.
• Don’t overemphasize a big contract with a major company. Instead, emphasize your strength at forging strategic relationships. “Take a negative and spin it into a positive,” he said.
• In the competitive analysis section of the business plan, remember to identify direct and indirect competition, and clearly state your company’s specific competitive advantages. “What are you doing that should really get us interested?”
• Assemble a credible management team and a knowledgeable board of advisors. Don’t depend on family and friends because the price is right, and don’t assume that success in other industries translates to your industry.
• Don’t present unrealistic sales and profit projections, underestimate expenses or forget to budget for unexpected costs.
Ultimately, though, Greenberg advised the audience not to spend too much time drafting business plans and instead focus on knowing their business inside out. “You’ve got to be able to speak intelligently when asked about these things,” he said, referring to the elements he had discussed. “As an entrepreneur, you need to know this stuff cold.”
–Anna Lynn Spitzer
