Prologue: Why Business Plans Fail

Prologue: Why Business Plans Fail

In compiling this guide, Growthink surveyed venture capitalists, corporate investors and angel

investors regarding what they are looking to fund and why in 2007. From these interviews, we

identified the ten most common reasons why business plans fail to raise financing.

A fuller description of these 10 pitfalls and complete information regarding what should be

included in your 2007 business plan can be found in Growthink's 2007 Business Plan Guide.

Pitfall #10: Excluding Successful Companies in the Competitive Analysis

Too many business plans want to show how unique their company is and, as such, list no or few

competitors. However, this often has a negative connotation. If no or few companies are in a

market space, it implies that there may not be a large enough customer need to support the

company's products and/or services. In fact, according to Joel Balbien, partner at Smart

Technology Ventures, including successful and/or public companies in a competitive space can

be a positive sign since it implies that the market size is big. It also gives investors the assurance

that if management executes well, the company has substantial profit and liquidity potential.

Pitfall #9: Over Emphasizing Partnerships with Well-Known Companies

Forging partnerships to improve market penetration and/or operations has become commonplace,

particularly for "new economy" businesses. The fact is that, regardless of whom the partnership

is with, partnerships