Get the most out of your Inc. online experience by registering and joining the Inc. community today. Get access to all Inc.com content and priority invites to free Inc. networking events in your area.

Login using:


Or login directly through Inc.com

Read This Box, Save $5,000,000

The seeds of every company's demise are contained in its business plan, says Fred Adler. The trick is finding them.

 

Frederick R. Adler has been reading business plans for 20 years. When he receives a plan -- one of the few that gets by the 10 venture managers who work for Adler & Co. -- he looks at the proposed product, he evaluates the tone and honesty of the plan, and he studies the resumes of the people proposed for the new company's management team. His initial review takes all of 10 minutes. From his years of experience, starting in 1968 as an investor in Data General Corp., in Westboro, Mass., he's learned to read a business plan the way a sailor reads the sky for signs of rough weather ahead. INC. asked Adler about the warnings in business plans that worry him the most.

"Their assumption that if they build a better mousetrap the world will beat a path to their door, rather than that they'll have to go out and find the users of the mousetraps. Lack of details as to competition, direct and indirect. A lack of understanding as to the processes by which people buy things. Their knocking of the competition -- knocking anybody, putting anybody down, bothers me. Their bragging about their own people -- so-and-so is the industry leader in such-and-such. If it's true, it's one thing. The bragging turns me off, scares me.

"Massive advertising budgets. Obvious weaknesses in the management team -- the picking of weak people. Titles, emphasis on titles: so-and-so is president, chairman, and chief executive officer: that's too many. Why is he all of that? Power. Ego. A very disproportionate share for the one key leader as opposed to other key players. Failure to put together a team as opposed to having one peerless leader. The brushing aside of the difficulties of bringing something to completion. The lack of provisions for delays or other problems. The lack of fear. In business, paranoia is not a psychosis, it's reality; it's probably survival. People who are unafraid scare me; they make me afraid."