Unless you are a “trust fund baby” or independently “well-heeled” by some other means, you are probably not going to get your startup off the ground without some type of outside investment. And unless your parents or some wealthy uncle is willing to fund you, you will have to develop a business plan to present to potential investors at various stages of your company’s growth.
Get ready for some hard work. Before you begin, make sure you are 100% committed to the business you intend to start. If not, your plan, your presentation, and ultimately your business will fizzle out.
So, What’s a Business Plan?
You can find business plan samples and templates all over the Internet; along with loads of free advice. But, first and foremost, your plan is a picture of your intended business that will make sense to you and whomever you are pitching. It will cover common ground, including:
- an executive summary,
- those who will be involved,
- your product/service and intended market,
- an assessment of the market and competition,
- a cash-flow scenario, and
- anticipated risks and your plan to minimize them.
Through it all, you want a potential investor to see your commitment and your passion.
Is Your Plan Worth the Paper It’s Written On?
Andrew Clarke, CEO of Ground Floor Partners (a consulting firm that advises early-stage businesses), suggests that “Unfortunately, despite the fact that many of the underlying businesses are viable, the vast majority of plans are hardly worth the paper they’re printed on.”
Don’t let this be you. As you devise your plan, watch out for these common business plan mistakes:
No one expects you be an English professor, but if there are glaring spelling and grammatical errors, an investor will wonder exactly how serious you are about your venture. If you have not taken the time to prepare this important document with care, how much care will you give to the issues and decisions you have to make as an entrepreneur?
Bad presentation style.
A business plan presentation should have a “feel” for solid organization of your thoughts, data and findings. This is achieved with headings, sub-headings, bullet points – all lending to a logical flow and improved readability.
Language needs to fit the potential investor. If you submit a plan to a conservative bankers with all sorts of informal jargon and slang, you can forget it; if you submit a plan to a group of progressive, risk-takers all dressed in jeans, stuffy formal language will be a total bust.
Business writing is crucial if you are going to appeal to your intended audience. Don’t be sloppy either. Make your margins consistent, number pages, label charts and graphs. If you don’t do this an investor will wonder how much attention-to-detail you will be giving to your business operations.
Leaving out important business information and assertions will pretty much doom you. If an investor is looking at several pitches, and yours is missing key elements, he or she will simply move on to the next founder.
You have to have the details, facts, and the figures to support the viability of your venture. No one is going to say yes when a plan has great goals and visions, but no carefully considered picture of how to get there or the market you’re attempting to enter into.
The opposite side of this coin is adding too much detail and expecting investors to wade through it all. Put cumbersome details in an appendix and summarize the important points in the plan itself.
All business plans have assumptions. But are yours reliable—based on history, current trends, and so forth? For example, never throw cost numbers out there, assuming what an expense might be. Do the research, find out the going rate and use reliable figures.
Lack of research.
Not doing enough research to back up what you say is a deal breaker. If you state there is definitely room in the marketplace for you, then you had better have the figures to back that up. Show what is missing and how you will fill a void. Another mistake can be in the research presentation itself. No one wants to read through paragraphs of figures and data. Organize key data points into graphics that can be read at a glance.
No risk assessment.
Who are you kidding? There are always risks associated with new ventures. Identify them, describe them, and explain how you intend to minimize them. This is called being honest with yourself and with potential investors.
Tom Glatt, owner of Glatt Consulting, a company that writes business plans, states: “Rather than explain away lack of demand as an unrealistic risk, as in the example, the business should identify what could cause lack of demand – and then outline how the business will respond to the cause itself. “
Claiming no competition.
Even if you create a stunning new app or a completely unique “take” on a product, you will have competition, and you will be wise to admit how you intend to address it.
No growth projections.
How will you evaluate your new company’s success? You’ll need benchmark targets along the way. Provide an investor with benchmarks to show that you have done some long-term planning and that you have a road map going forward.
Lack of enthusiasm.
Yes, this is a business plan; and, yes, you are attempting to objectively present the viability of your business idea. But part of that “viability” is you – your enthusiasm and your passion. Show that whenever possible. As Ben Yoskovitz, founding partner at Year One Labs explains: Investors often say that they invest in people first, then the market and lastly, the idea.”
Excluding your ‘why’.
Why will customers care about your product or service? What need will you fill or pain will you relieve? Consider the Dollar Shave Club. The premise for the startup was that people feel “ripped off” when they buy razors in a local retail store. So, the company will ship razors every month for less. It’s the concept of not getting “ripped off” as much as anything else that has made this business. That’s the “why.”
Be prepared for some hard work. And once you have landed investors, be prepared for even more!
This article has been edited and condensed.
Julie Ellis is a marketing professional and the founder of Premier Essay writing service. “New contacts – it’s always great opportunities to share your knowledge.” Connect with @premieressay on Twitter.
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