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


Are you unknowingly undermining the credibility of 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 in business plans that most investors 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 destroy credibility. They won't do a thing to market your business or raise capital. 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: 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 and they don't build credibility either. 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? Would they improve your credibility?

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." Weed out platitudes and generalities from your business plan with the puffery sensor and establish credibility. As you write or review your business plan simply ask yourself, "Will my potential investors really believe this statement?" If the answer is no, dig deeper for the evidence that will convince them.

Mike Elia is a chief financial officer and an advisor to venture capitalists and leverage buyout specialists. His business plan ebook "Business Plan Secrets Revealed” shows how to make your business the most appealing investment choice to venture capitalist, bankers, and other business investors. Click here for more tips on how to bolster credibility with investors.

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