When potential lenders or investors review a business plan, they are keenly aware of the risk/return tradeoff: the greater the risk involved in the venture, the greater the return demanded. Potential lenders and investors are keenly aware of the following twelve factors as they review business plans. How well does your plan score?

1.     My plan describes a marketable idea.
   
   
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3. My plan targets a clearly defined market with enough size and purchasing power to produce a profit.
   
   
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A small, specialty A large market market with little with high growth or no growth potential. potential.

Logic: Lenders and investors look for businesses whose target markets are clearly defined. They also prefer large markets with high growth potential. They avoid businesses that attempt to be "everything to everybody."

4. My plan explains clearly the "competitive edge" my product or service has over rivals.
   
   
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My "me-too" My product product or or service is no better service is so than the competition's. unique that it   is proprietary.

Logic: One key to success is having a product or service that truly is unique, offering customers something that the competition does not. Lenders and investors look for clear evidence of a competitive edge.

5. My plan shows my company's ability to control both the delivery and the quality of the product or service.
   
   
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Total dependence Complete in-house on outside contractors control of all and a mercenary sales resources needed to force to make and distribute the product service. product/service.

Logic: Dependence on outside contractors and sales representatives is a potential weakness--especially when the quality of delivery, installation, and service of the product is a key factor.

6. My plan shows that managers and employees have the skills and the experience to make the company a success.
   
   
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Managers have never All managers operated a business and employees of their own before are experienced and employees are in this business. inexperienced.

Logic: Lenders and investors don't put their money into businesses; they put it into people. Skilled, experienced managers and employees can make a business work even when resources are stretched thin and conditions are tough.

7. My business idea is not overly complex.
   
   
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A large number of One--or just a complex products few--products or services sold. or services sold. to customers who to customers who must be educated understand their about their benefits. benefits.

Logic: Most successful companies start with just one product or service--or a few, at most. Trying to do too much too fast--and having to educate the consumer about a product's or service's benefits--can push a company under before it's out of the blocks.

8. My plan shows that I've made a personal investment in this business venture.
   
   
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Entrepreneur has Entrepreneur put up "sweat has almost all equity" only and personal assets refuses to risk at stake. any personal assets.

Logic: If you don't believe in your own venture enough to invest at least some of your own money in it, how can you expect others to? "Sweat equity"--unpaid personal time and hard work--can be important, but lenders and investors like to see an entrepreneur with an important financial stake in the business. It's a tremendous source of motivation.

9. My product or service offers customers a long-term benefit.
   
   
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Product or service Product or could be potentially service is good dangerous to the world. for the world.

Logic: Customers--and therefore lenders and investors--are more sensitive to products or services that have the potential to damage the environment or to harm people. Does your product or service offer a way to make the world a better place? Have you considered the environmental implications of its packaging and disposal?

10. My plan lays out a clear, well-conceived, workable strategy for getting this business up and running.
    
    
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No real strategy A well-designed exists--except in my clearly formulated head. No time to put business strategy everything down in exists. writing ... I know   it'll work!

Logic: Nothing scares off lenders and investors faster than an entrepreneur who has no time to prepare a business plan that lays out a clearly defined, workable business strategy. Preparing a plan is an essential ingredient in making a new business venture work. There are no shortcuts!

11. My plan contains realistic financial projections covering most likely, pessimistic, and optimistic scenarios.
    
    
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No financial Complete financial projections or projections (including only "best-case" cash flows) based on projections clearly identified, included. reasonable assumptions.

Logic: Potential lenders and investors want to be sure that the "dollars and cents" of the deal make sense, and that's why realistic projections are important. Most entrepreneurs underestimate the amount of money needed for startup. Don't get caught short!

12. My plan communicates my vision for the business and why it will succeed to potential lenders and investors in a clear, concise fashion.
    
    
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My written plan is My written stained with coffee plan is rings, but, after all, polished and it's content that professional, and really counts. My idea so is my oral speaks for itself. presentation.

Logic: Don't fool yourself. You must sell your idea on paper before you have a chance to sell it in person. Lenders and investors formulate opinions about entrepreneurs and their business ventures based on first impressions, which often come on paper in the form of a business plan.

Scoring:

How did you do? Use these scoring guidelines to see if your plan is likely to win financing or if you need to "go back to the drawing board."

POINTS COMMENTS 108 - 120 The "gold" standard. Your plan stands a good chance   of getting funded.

96 - 107 The "silver" standard. Your plan needs some   polishing, but you'll likely be able to attract some   financing (though maybe not all you seek).

72 - 95 The "bronze" standard. There is a possibility your   plan will get funded, but it will be difficult to find a   source.

71 and below "Back to the drawing board." Funding is very unlikely.      You've got a lot of work to do!

Before You Start: A Basic Checklist	Business Plan Evaluation Scale	Case Solutions	Small Business and Entrepreneurship Resources	Small Business Management Audit	Feedback	H O M E

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