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.
Mike Elia is a chief financial officer and advisor to venture
capitalists and leverage buyout specialists. His manual Business
Plan Secrets Revealed shows how to make your business the most appealing
investment choice.
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