If You are a Startup Entrepreneur, You Must Justify Any Assumption That You Will Perform Better Than Competitors

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One common mistake that entrepreneurs make when planning for their business, is assuming that they will be able to perform better (usually in a whole variety of operational aspects) than their competitors.  This is a pet peeve of many investors I know and it has come to be one of mine as well.  The bottom line is that if you are going to project operational and financial results based on assumptions that you will greatly outperform your competitors, you must have a rational justification for your assumptions – not just that you’re “better” than them.  How will you as an early stage company, for example, outperform GE in your throughput on the widgets you manufacture?  Crazy you say that someone would make such an assumption – maybe yes, maybe no – but you’d be surprised how often I’ve seen this assumption (or similar) in the business plans, Private Placement Memorandums and financial models I’ve reviewed..

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Paul is a serial entrepreneur, strategic and risk management advisor, marketer, speaker and coach who has dedicated the majority of his career to entrepreneurship, leadership and peak performance. Paul has worked with various entrepreneurial companies in senior management roles and has led the development, review, and selective implementation of several hundred start-up and corporate venture business plans, financial models, and feasibility analyses. He has performed due diligence on and valuation of many potential investment and acquisition candidates. Paul was also the Director of a consulting operation in Wharton Entrepreneurial Programs and holds a Bachelor of Science degree in Economics and an MBA from the Wharton School of the University of Pennsylvania. Paul has lived, worked, learned and traveled extensively in Latin America, Europe, and Asia and speaks and writes English, Portuguese, and Spanish.

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