1.2. How to make a business plan convincing?

1.2.6. Typical Mistakes in Business Plans

When it comes to the business plan, it is the inner coherence and the details that matter. Common mistakes made by entrepreneurs are:

Insufficient professional, commercial qualification or personal competence .

The business plan does not match the professional qualifications of the founder. It is not clear that the founder has the factual and/or commercial knowledge that makes business success likely. This may be the case if an interesting business idea cannot be marketed successfully or if the financial considerations or cost accounting do not match. It is also possible that the content and quality requirements are so high that the business management implementation cannot keep up with them. The founder lacks the professional and life experience to be able to offer a certain service; this could be the case if, for example, a "career starter" wants to start as a management consultant for top management.

Remember: The business idea should fit the skills of the founder. Making money selling "bratwurst" is better than failing with a complex internet business.

Insufficient market knowledge , of the industry and competitors

Every product and every service has to find its customers. Often the sales forecast does not match the market, the demand is overestimated. It makes a difference whether a business is to be done in the trade, commerce, service sector or in the health industry. Everywhere there are standards and rules that make a market and an industry special. Market maturity means knowing the industry and the customers as much as possible. This is especially true for competitors who have been in the market for a long time. Not only must they be perceived, their offer must be analysed so that unique selling propositions can lead to a market advantage. It is important to discover gaps in the market.

Remember: Every market has its own rules. If you don't know them, even the best idea will fail. It is not very successful to try to sell a truck to a child - unless it is a "toy truck".

Insufficient commercial or economic concept

Every successful entrepreneur must know the basic arithmetic of his business. It is often misunderstood that the product or service description has a direct impact on the sales forecast and the target customers. There is a lack of basic understanding of what investments are and how they can be financed. The calculation is often a book with seven seals. If you don't have enough equity capital, you have to raise outside capital. A favourable business start-up loan can help. Often the running costs are underestimated. The entrepreneur's salary is forgotten or set too high. Basic commercial knowledge is lacking for liquidity planning. Illiquidity is one of the most frequent causes of insolvency. Then the company has to leave the market, usually with high personal debts of the entrepreneur.

Note: Anyone can acquire commercial knowledge. Business management thinking has a lot to do with experience and market knowledge. If you were to write down and analyse all income and expenses in a budget book every day, you would be doing the best controlling that start-ups can imagine.

Inadequate presentation of the business plan

A business plan must be written and presented in the same way as an application. The personal impression that the founder makes on the decision-maker, the managing director, the bank or a business promoter must be right. If you want to sell something, you have to put yourself in the position of the customer or client. In other words, customer orientation also applies to the self-presentation of the business plan. Success comes to those who know how to convince others with their cause and their person. The personal competence and motivation for the success of the business idea must be presented.

Remember: If you want to convince others, you have to be convinced of yourself. Convincing means putting yourself and your business plan in the right light. That means skilfully promoting the cause and oneself.

Video: This TED-Talk by Adam Grants (Professor for Psychologie at University of Pennsylvania), gives an inside on the relevance of Authenticity for the success of a business idea.^*

(Source: TED 2016)

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* This Video and its contents are not essential for the exam