With so many opportunities, many investors simply focus on finding reasons to say no. They probably feel that entrepreneurs who know what they are doing will not make basic fundamental mistakes. Your business plan is very often the first impression potential investors get about your new idea. But even if you have a great product, team, and customers, it could also be the first and last impression an investor gets if you make any of these mistakes.
Business plans that fail to explain the sales, marketing, and distribution strategy of the proposed business are doomed. The key questions that must be answered are, who will buy it, why, and most importantly, how will you get it to them? You must explain how you have already generated customer interest, obtained pre-orders, or better yet, made actual sales.
Business Plan Makes Realistic And Adequate Financial Projections
Make sure your business plan makes realistic and adequate financial projections. Basic financial projections consist of three fundamental elements, income statements, balance sheets, and cash flow statements. All of these must conform to generally accepted accounting principles. Investors will most likely expect to see three to five years of projections.
If you make silly mistakes in your business plan, what does that say about how you run your business? This is often a make or break point and it is critical to have your business plan written as professionally as possible. A well-written plan should cover key points only twice, once briefly in the executive summary, and again, in greater detail, in the body of the plan.
Appearance matters! At one time
Appearance matters! At one time, an investor may have dozens of plans waiting to be read. Make sure your plan stands out by ensuring that the cover is attractive, the binding is professional, the pages are well laid out, and the fonts are large enough to be easily read.
Don’t wait too long and then stake your new businesses future on a hastily written plan. Or one that you just don’t quite agree with and understand fully. Don’t put it off. Your team should be prepared to invest about 400 to 500 hours into the plan. If you are too busy building your product, company, or customers (which is arguably a better use of your time), consider outsourcing the researching and development of your business plan.
It’s a tough investment world out there, but great ideas backed by great teams with professionally written business plans are still getting funded. Give yourself the best possible chance by avoiding the most common mistakes.