Don’t Hype the Business Plan

A business plan is a living breathing document in that it can help you obtain capital through angel investors and then serve as the blueprint for goals and strategies. However, the business plan filled with hype is dead on arrival during fund raising because business plan readers will quickly recognize over-promising exuberance not based in reality. You may have an amazing idea and believe it’s a wide open market niche with no competition, but can you prove so?

Though angel investors are not financial institutions, they still rely on solid market and financial evidence for decision making. Using an abundance of words like ‘unprecedented’ and ‘one of a kind’ sends a signal that you have not done in-depth market research. Even if you have done the research, these kinds of hype words set a tone of naiveté and inexperience because very few products are unprecedented and lack competition.

As you write the business plan with the intent of submitting to angel investors, the words you need to be thinking should be more along the lines of ‘proven’, ‘accomplishments’ and ‘competition.’ If you say that your product is unprecedented then that word needs to be supported by third-party market research proving to the best of their ability that you have actually developed a radically new product.  Even in that case, you also must still prove that an expanded market will want to buy your unprecedented product before angel investors will capitalize your startup. An unsold unprecedented product has no value.

Avoiding the hype in a business plan takes discipline because entrepreneurs are naturally excited about their initial stage of business growth. Hype makes your job of selling a business plan to angel investors much harder than it needs to be. Avoid the hype and the business plan begins on solid ground, and from there your fund raising chances can only go up.

More detailed information and useful advice can be found at www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

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