Management
Authors Kuratko and Hodgetts provide a list of the most common pitfalls in
assembling a commercial business plan.“ They are failing to communicate realistic
goals, failing to anticipate problems, lack of evident commitment or dedication to
the venture, lack of experience, and failure to demonstrate market niche. ‘Ihese
pitfalls are just as important in the case of social enterprise business plans U nreal-
istic goals and a lack of niche generally relate to a lack of adequate demand-and
suggest a flawed business model. Failing to anticipate problems and roadblocks
stems from an overall lack of experience and a failure to seek the help of someone
who can fill this gap. A lack of evident dedication is probably the worst pitfall of all
for a social venture because the returns to noncommercial enterprises are usually
denominated in nonfinancial terms Stakeholders expect that one of these nonfi-
nancial returns is fulfillment, even pleasure,from the social entrepreneur. As such,
a lack of obvious dedication is tantamount to saying the enterprise will have a low
payoff A business plan should exhibit enthusiasm and total commitment.
Authors Baron and Shane add a few more pitfalls to the business plan mix.l2
First appearance is important. They note that stakeholders tend to be put off by
business plans that are sloppy, or too “slick.” Second, potential supporters of a ven-
ture lose interest in a business plan that fails to get right to the point of the enterprise
or make clear why anyone would want to support it111ir¢ stakeholders can sense
when financial projections are unrealistic or inappropriately optimistic. Fourth, it
must be clear where a venture is in terms of its development -whether it has already
begun, or is still purely an identified opportunity. Finally, supporters have to under-
stand the qualifications of the venture’s leaders before they will become involved.
1. Your partner volunteers to “crank out” the business plan for LearningSite.
org-whatever it takes to get the money. Explain why this may not be the
best approach.
2. You don’t have a business model for LearningSiteorg yet, either. Should you
try and create one before writing the business plan? Why or why not?
3. Looking at the first draft of the busineg: plan, you see that your partner omitted
discussion of the risks from key personnel leaving LearningSiteorg, or of not
getting sufficient funding after the foundation grant finishes You point this out,
but your partner argues that this would ” just open a can of worms” Comment.
4. You are debating whether or not to have LearningSiteorg’s business plan
professionally designed by a graphic design firm. It will be expensive, but it
will look great. Should you do it? Discuss the costs and benefits.