The Fundamental Reasons Why a Funding Business Plan Fails

November 1, 2010 by Frank Goley, Business Consultant

Business Plans don’t guarantee funding. It is the foundation and fundamentals behind a Business Plan that give the plan and company the best chance to obtain funding. The distinction is important. No matter how colorful, flashy, professional looking and apparently well written a business plan is, there are business fundamentals which need to be proven out in the plan to make the funding request viable. We see so many business plans on the market that look great from an aesthetic standpoint and appear to have all the necessary ingredients, but upon closer inspection are just canned, cookie cutter plans that prove little as to specifically why a particular company is a good investment or lending risk. A sample business plan that got one company funding won’t get another company funding unless that company has the right business fundamentals in place. Let’s look at the top two business fundamentals often missing in a business plan that fails to help a company obtain funding.

Inadequate Business Plan Process

The quality and depth of the Business Planning Process is more important than the business plan itself. If the process is lacking, then the produced business plan will be significantly lacking. The planning process needs to be customized for the particular business. Our Business Planning Customers often remark that the process behind the business plan development was extremely beneficial, even more so than the finished plan itself. A good business planning process uncovers problems and addresses them prior to sending the plan to a funder, maximizing the reception to the plan and the results of the plan.

Tip: Please see my Business Plan Book for a proven business planning process that can be applied and customized to all types of companies, no matter the stage, size or funding level.

The Business Plan Didn’t Adequately Prove How the Business will Succeed

This is a huge point. As Business Plan Consultants, we see many funding business plans being developed in the marketplace which are shallow, hollow plans that do little to adequately and realistically prove to the funder that the business is capable of being successful, servicing the debt level requested, and being a good investment risk. The underlying principle behind any business plan, no matter its purpose, is to prove out and show how the company will run successful business operations. Due to the success of the operations and marketing of the company, a case can be made for funding. A Funding Business Plan is really just correct formatting and having the information a funder is looking for. It is the fundamentals behind the plan that prove a best chance for business success that helps to position the company for a successful finance campaign. If a plan is lacking these fundamentals, it will never have a chance at obtaining funding.

My next blog post will explore some more of these business fundamentals and other reasons why a business plan fails to help a company to obtain funding.  


Posted in Business Finance, Business Planning.

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