How sound is your business plan?

Neil Clough

Neil Clough (Photo credit: TaylorHerring)

If you have been watching the BBC’s ‘The Apprentice’ you will know that one of the best candidates was eliminated before the final. Lord Sugar appeared to be genuinely upset. Neil Clough was fired because his business plan lacked credibility and because he remained wedded to it for far too long when experienced advisers were pointing out the flaws. Are you in danger of making the same mistake?

Neil’s mistake is one I have encountered many times in my years working as a business adviser to start ups. Too many people think their business will succeed because they think it is a good idea. They eliminate any evidence to the contrary and refuse to listen to conflicting views. I’m not saying that we allow these views necessarily to stop us but we should listen and consider their validity.

What was wrong with Neil’s plan?

For those who haven’t seen the latest edition of the Apprentice Neil’s business idea was around an online platform for selling houses. People would advertise their houses on his website and would then manage the sales process themselves so eliminating the need for an estate agent. However, Neil wanted estate agents to pay him for the privilege of advertising the houses on their books. The idea was born out of Neil selling his own house where the estate agents had failed.

Neil is a consummate salesman, most of us are not so there is flaw number one. We use estate agents because they understand the right buttons to push to sell houses and they can do so dispassionately. We, on the other hand, have an emotional connection to our homes and find it difficult to distance ourselves from that when selling our houses.

Estate agents have a database of potential purchasers whose needs they understand, we do not so we would have to rely on people finding us on the website. As so many of the TV property programmes have shown house hunters frequently dismiss suitable properties they have found on the Internet usually for invalid reasons, so there is flaw number two.

Estate agents are already advertising on the Internet, there are some very big, high traffic websites out there already, why would they advertise on one that was trying to do them out of business? So flaw number three.

It didn’t take very long or any expertise in selling houses to uncover these flaws in Neil’s business plan so why did he stick to the plan for so long? Well part of that will have to do with the TV programme and the pressures of filming but some of it was because Neil really felt he had a good idea. He got too close the the idea to be objective. We can all make the same mistake.

How do we avoid making the same mistake?

I believe we have to look for what could go wrong. We have to find reasons why the idea wouldn’t work. This means being honest with ourselves and being open to other people’s ideas. We have to ensure that we are not too close to the idea to remain objective. We need to conduct research which looks for the weakness as well as the strengths in our proposal. When we know where the problems are we can decide how to address them. We can decide whether some tweaks would make the idea viable or whether we should give up on it and look for an alternative.

When I’m working with potential start ups I frequently play the devil’s advocate, challenging ideas, pointing out competition, finding reasons why the idea won’t work. Some don’t like it! They think I’m being negative. I do it not because I want people to fail but because I want them to succeed. Where possible I will offer alternative suggestions for people to consider or help them to plan the research to help them prove the viability of the plan. I will challenge even if I think the idea is a good one because in defending the idea the entrepreneur can identify the crucial messages for the business plan or a fundraising pitch.

If you need an opinion from an objective outsider who wants you to succeed why not book a complimentary half hour session to see how I can help. Book here.

As for Neil Clough, I am absolutely sure he will succeed. He has demonstrated many skills ( and quite a lot of arrogance) to a nationwide audience. Those who watched , ‘The Apprentice You’re Fired’ will have seen beyond the arrogance to the man’s vulnerabilities. He has a achieved a certain amount of celebrity which he should be able to use as a catalyst for his future ambitions. He will receive job offers and other opportunities, who knows he may even get one from Lord Sugar.

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