Bolster Credibility with Investors--Avoid These Phrases in Your Business Plan

Remember Papa John's commercial on TV with the slogan "Better Ingredients, Better Pizza"? Well its nothing more than puffery: general, non-provable, inane claims. The problem is puffery is not only acceptable it's often expected. Phrases like "the biggest," "the best," "the cheapest," and so forth are so over used most people simply ignore them.

If you're guilty of using puffery in your business plan, you risk filling your plan with circumstantial evidence and bold claims that won't do a thing to market your business. These frivolous claims add nothing to help an investor decide whether your business venture is truly any different from the other ventures they are evaluating. To weed out general, non-provable, inane claims, you need a plain and simple puffery sensor. And, here it is: whenever you make a claim in your business plan ask yourself this question, "Will investors really believe this?"

Let's take as an example a business plan for a car dealership that included these claims:

• "We've got the largest selection of Ford cars and trucks in the entire city."
• "We're the largest volume Ford dealer in the southwest."
• "We sell more Fords than anyone else in the state."

Seasoned investors read right over this kind of hollow puffery in business plans. They're to the point that they expect entrepreneurs and business owners seeking investment monies to say anything and everything in an attempt to impress them.
 
In fact, one of the great pioneers of action-oriented advertising, Claude Hopkins (Tested Advertising Methods: http://testedmethods.bizplansecrets.com/) often drew this analogy to describe the use of general, non-provable, inane claims in advertising and I've found it equally applicable to writing business plans: "Platitudes and generalities roll off the human understanding like water off a duck's back. They make no impression whatsoever."

Aren't puffery, platitudes, and generalities all the same thing? You bet they are. And if you believe Mr. Hopkins, these kinds of statements roll off the human understanding like water off a duck's back. They make no impression whatsoever. I don't know about you but if I'm spending my money and time writing a business plan to raise capital for my business, I want it to make an impression!

Here are some other examples I've seen in business plans. A commercial realty company says, "We Go The Extra Mile For Our Clients." It's puffery. How about this wonderful statement regarding a consulting firm's competitive advantages ..."Knowledge. Expertise. Determination." That's it. That's the first line! That's their big "hook" to get investors to part with their money and back the firm's business plan. They might as well not list any competitive advantages.
 
Then there's the construction management company that claims, "We fine tune the process to create unique building solutions that function better, cost less, and open sooner." Don't get me wrong. All of these sound like fine benefits. But do you really think investors believe this? If you play the puffery game, it can cost you your credibility, lengthen or even prevent you from getting funded. Avoid these kinds of statements in your business plan - they make no impression whatsoever on potential investors.

Now, suppose this construction management company explained their "unique" process, provided cost comparisons, and gave the actual length of time to complete their last twenty projects against industry standards for similar projects. And, suppose they provided customer testimonials to back their figures. Would this be more believable? More convincing?
 
See the best remedy for puffery is hard verifiable facts and evidence. The same type of facts and evidence that you would want a defense attorney to present to a judge and jury on your behalf if you were on trail and facing death row.
 
Okay, I think we beat puffery to death already; it's pretty straightforward. To summarize, let me repeat Claude Hopkins' quote: "Platitudes and generalities roll off the human understanding like water off a duck's back. They make no impression whatsoever." So use the puffery sensor as you write and review the statements in your business plan. Simply ask yourself, "Will my potential investors really believe this?" If the answer is no, dig deeper for the evidence that will convince them.

Article by Michael Elia - mike@business-plan-secrets-revealed.com. Mike is a CPA/MBA, visit his site http://www.business-plan-secrets-revealed.com for a free business plan guide and more articles on business plans.

Telegraph.co.uk

News Corp. Says It Provided Info for Sun Corruption Arrests Reuters By Lucas Shaw at TheWrap News Corp. said Saturday that it provided the information to the police that resulted in the arrest of five of its journalists earlier in the day. In a statement the company said: "The Management and Standards Committee (MSC) ... UK police arrest five journalists in newspaper bribery probeFox News Staff at The Sun tabloid arrested in bribe inquiryUSA TODAY Sun Journalists Arrested as Bribe Probe WidensWall Street Journal all 1,496 news articles »

MiamiHerald.com

Oracle to Pay $1.9B for Taleo, Extends SAP Rivalry ABC News Oracle Corp. is escalating its rivalry with German business-software maker SAP AG with a $1.9 billion purchase of Taleo Corp., a company that helps businesses hire and manage their employees. The proposed purchase announced Thursday extends Oracle's ... Oracle Buys Taleo for $1.9 Billion, Adds Human-Resource ToolSan Francisco Chronicle Oracle to pay $1.9b for TaleoNEWS.com.au Oracle to buy Taleo for $1.9 bln; cloud war brewsReuters GMA News all 482 news articles »

TEXT-S&P revises Apollo Investment Corp outlook to stable Reuters (The following statement was released by the rating agency) -- Apollo Investment Corp. (AIC) has announced changes in management, a reduction in its dividend, and adjustments to its investment strategy. -- In our view, changes to the firm's investment ... Company News for February 9, 2012Zacks.com Apollo Investment's CEO Discusses Q3 2012 Results - Earnings Call TranscriptSeeking Alpha Apollo Investments Considers Capital Raise; Unveils Management ShiftsWall Street Journal Economic Times -Tech24 all 30 news articles »

New York Times

Oracle to pay $1.9B for Taleo, extends SAP rivalry Seattle Post Intelligencer Oracle is paying $1.9 billion for Taleo Corp., a company that helps businesses manage their employees. Photo: Mark Lennihan / AP NEW YORK (AP) ? Oracle Corp. is escalating its rivalry with German business-software maker SAP AG with a $1.9 billion ... Oracle Signs Acquisition Deal With Taleo for Cloud ComputingIndustry Leaders Magazine Oracle's $1.9bn Deal to Buy TaleoZacks.com all 117 news articles »

Wall Street Journal

AMR bankruptcy: Retirees group files for involvement in case Tulsa World The organization, AMR Retirees Pension Protection Corp., is based in Owasso and includes former members of American Airlines upper management at the Maintenance & Engineering Center in Tulsa and the carrier's maintenance base in Fort Worth. Exclusive: American Airlines creditors want to talk mergerReuters Transport workers union says it will have counterproposal next week for AmericanFort Worth Star Telegram all 26 news articles »

PetroFrontier announces change in management Sacramento Bee 10, 2012 -- /PRNewswire/ - (TSX-V: PFC) - PetroFrontier Corp.("PetroFrontier") announced today that Peter Philipchuk, Vice President, Exploration, has resigned from PetroFrontier. PetroFrontier thanks Mr. Philipchuk for his service and wishes him well ... and more »

Integrated Asset Management Corp. Announces Results for the First Quarter of ... MarketWatch (press release) TORONTO, ONTARIO, Feb 09, 2012 (MARKETWIRE via COMTEX) -- Integrated Asset Management Corp. ("IAM") /quotes/zigman/18979 CA:IAM -10.00% today announced unaudited financial results for the quarter ended December 31, 2011. Review of the 3-Month Period ... and more »

Edgewood Management Holdings in 4th Quarter: 13F Alert Bloomberg Top Positions by Market Value Company Name Ticker Market Value Current Change (USD $) Position In Position Celgene Corp CELG US 424280043 6276332 -33371 QUALCOMM Inc QCOM US 397587935 7268518 -21149 Visa Inc-Class A Shares V US 389712244 3838395 ... and more »

msnbc.com

Alcatel-Lucent Shares Soar on Profit Jump Wall Street Journal An ongoing price war, combined with the pressure of lowering costs while maintaining research and development spend means that Alcatel-Lucent's management will have to speed the pace of restructuring. "In the market there was a relief that they made ... Recent IPOs Review: RPX's Licensing Syndicate with Alcatel-Lucent, Apollo ...Wall St. Cheat Sheet all 201 news articles »

Eaton Vance Closed-end Diversified Equity Income Funds Declare Quarterly ... Sacramento Bee The Funds are managed by Eaton Vance Management, a subsidiary of Eaton Vance Corp. (NYSE: EV), based in Boston, one of the oldest investment management firms in the United States, with a history dating back to 1924. Eaton Vance and its affiliates ... and more »