I read a lot of business plans and I see the same things. If the entrepreneurial writer is saying one thing, this is what I typically think it means:

If the plan says: “Our numbers are conservative.”

I read: “I know investors want us to get to $50 million in 5 years. I backed into the numbers years 1 through 4 to make it look right.”

If the plan says: ” We’ll give you a 100% internal rate of Return on your money.”

I read: “If everything goes perfectly right, the planets align in a regular formation and we get lucky, you might get your money back.”

If the plan says: “We project a 10% margin.”

I read: “We kept the same assumptions that the business plan software template came with and did not change a thing. Should we?”

If the plan says: “We only need a 5% market share to make our conservative projections.”

I read: “So do all the other 100 competitors that will be entering your area.”

If the plan says: “Customers really need our product.”

I read: ” We haven’t yet asked anyone to pay for it yet” or “All our current customers are our relatives”.

If the plan says: ” We are the low cost producer.”

I read: “We haven’t exactly produced anything yet, but we think we can do it cheaper than anyone else.”

If the plan says: “We have no competition”

I read: Actually… I stop reading the plan. Always beware of companies that have no competitors. If your are right, it’s a problem and if your wrong, it is also a problem.

If the plan says: ” Our management team has a lot of domain experience.”

I read: ” They are consumers in the product area and would love to have a chance to work in this industry”.
If the plan says: “A group of selected angels are interested in funding our startup.”

I read: “We have e-mailed everyone we found mentioned in the local media and no one has responded to us yet.”

If the plan says: “We want smart money”

I read: “We are desperate, we’ll take any money we can get.”

So what is one to do? Understand every part of your plan and be able to defend it. Use your own passion to describe your plan. Don’t use new economy speak that came out of a book. Don’t say stuff just because everyone else is. Make your plan your own.

Do you have others? Please e-mail me!

Thanks to William Sahlman in his Harvard Business case study “Some Thoughts on Business Plans” for inspiring this one.