Imagine for a moment that you are an investor, with eager entrepreneurs pitching their big ideas to you. In a very short time you need to make an assessment of the proposal, opportunity and risks. Alternatively, put yourself in the shoes of a bank loan processor, assessing a multitude of applications for business finance; again you need to quickly make decisions on the risk of the submission and likelihood of repayment or default. If that was you, what would you be looking for? Key criteria would include a strong performance, a well presented proposal, strong business management skills, reliable business owners, a proven track record and a well-operated business. No surprises there. A vital tool in the communication of the business, is the business plan, so strong presentation obviously increases the chances of getting a “yes”.
Amazingly, at The Business Plan Company we are constantly asked to prepare business plans for poorly prepared businesses and weak business concepts; little consideration is given to the background required to convince and persuade. In the rush to go asking for money, these owners forget to put their pants on before heading out the door.
One of the most common type of pant-less applicants we see are the starry eyed start-ups. Seeing stories of successful celebrity business owners, particularly the mega rich founders of Airbnb or Uber, these aspiring business owners pack their big idea and go seeking investors. Inexperienced, not well connected and unfamiliar with how they are perceived, their lack of preparation shows up starkly.
The founders of a business are a key consideration in pitches to investors or loan applications, rightly being considered the biggest risk to a successful venture. Yet aspiring owners so often present themselves poorly, with no business ownership experience and, to make matters worse, don’t even supply sufficient detail to polish their presentation. A lack of relevant business owner detail weakens submissions significantly. In the worst case, I even had a CV sent as a photograph of a post-it note.
Big ideas don’t turn into big businesses on their own. Seasoned business people know that even the best ideas are just ideas. Until they show traction in the market and the product-market fit is proven (usually with a lot of iterations from the first idea), there are no home runs to celebrate. Presenting a bare bones idea and expecting total investment from the bank or investors can be tough work when the founder has done no development whatsoever (not even a name or a prototype), has no clients and has not invested any of their own money.
The other common scenario is ‘The Scramble’. Pant-less business owners come along in urgent need of a business plan, tender or proposal, usually at short notice. Then The Scramble begins. As part of the plan or submission we need such information as up-to-date financials, OH&S systems, policies and procedures and evidence of brand presence in the market. What we often find, however, is that the accounts haven’t been updated, the website is a mess and all those things that were on the ‘should have done’ list, all of a sudden matter. When we create the plan, we polish up what our clients have and make good descriptions of intentions. But it shows. In a competitive market, assessors can see the shortcomings from a mile off.
Getting money from banks or investors, winning tenders and getting applications approved is tough. Make no mistake, competition is fierce. Polishing up your submission is essential but can only go so far; underneath that, the substance counts. If you put yourself on the other side, you can very easily see those who have no pants on. Doing your homework, with good business planning practices, and thorough, thoughtful submissions pays dividends.
By: Dr. Warren Harmer