Getting funding from a business plan is difficult, even a very good one. You can give yourself a better chance of raising capital if you avoid eight common business plan mistakes.
Your business plan is likely to be the first thing investors see, so it’s important that your business plan is written professionally and well. Investors see thousands of business plans every year, and less than 1% receive financing. If you avoid these mistakes, you’ll greatly improve your chances of receiving funding.
1. The overall content is wrong
A well-written business plan can find solutions to problems that customers are looking for and willing to spend money to solve. This plan doesn’t need superlatives to describe it as great. If it’s great, readers will come to that conclusion. Additionally, make sure your plan presents a focused strategy that solves only one problem in your target market.
2. Statement of “No Competition”
Every business has direct or indirect competition. Competitors are everyone else trying to sell products to the same target market. Your plan should show how you stand out from your competitors and show that you are stronger in the market.
3. Too long and too technical
Your plan must succinctly communicate your business philosophy. Any details you feel are important can be included in the appendix. Additionally, your plan should not be too technical or scientific. Keep things simple.
4. Poor organization
A business plan should be put together in a logical way, and each section should flow logically into the next. You can find hundreds of resources that tell you what the basic parts of a business plan should be, and you or any professional you hire should follow this advice.
5. Incomplete or inaccurate financial statements
You must use the correct terminology to describe the financial health of your business. Financial data should contain enough detail to fully support your material assumptions.
6. Unreasonable financial forecasts
All numbers in your financial forecast should be reasonable and similar to the financial forecasts of other companies in your industry. Your financial statements must include an income statement, balance sheet, and cash flow statement, and they must all be prepared in accordance with GAAP.
7. Writing errors
You must use correct spelling and grammar and cannot be redundant. Make sure your plan is attractive, interesting, easy to read, and professional-looking.
8. Wrong timing
Get your plan in its final form before you present it to investors. You may not have enough 500+ hours to write a business plan. Then you have to hire a business consultant to write your plan. Before presenting the plan to investors, be sure to have another objective person read the plan thoroughly and give you some feedback on its effectiveness.