The 4 Deadly Sins You May Have Committed in Your Business Plan
By: Top 10 Best Business Loans Staff
Startups are popping up by the hundreds of thousands each month, but that’s not an indication of success, per se. Many businesses begin with bright ideas for the future but their fire is quickly extinguished by the crushing weight of debt and unexpected pitfalls that are all too common in the business world.
Estimating your startup costs is not easy, but with a little help you can avoid these 4 common business plan mistakes before you begin raising capital.
#1 Not Having a Plan
Being headstrong and enthusiastic is a prerequisite for starting a business. That doesn’t mean being foolish or rash, though. Focus that energy and verve into being as thorough and as driven as possible when crafting your business plan because walking into a room full of investors without a solid plan is a guaranteed fail for your business.
#2 Having a Poorly Written Plan
Not having a business plan is bad, but having a poorly crafted plan is almost as detrimental. Anything that is poorly written, sloppily presented, using mismatched style or incomplete will have investors reluctant to give you any money.
Make sure your business plan is free from spelling or grammatical errors, clear and easy to read. Give it to someone educated whom you trust to read over and look for mistakes or inconsistencies. If you are a trendy and hip grill and bar, for example, don’t use archaic language or overly technical terminology.
#3 Being Dishonest
The number one key to any successful relationship is trust. If partners cannot trust one another, then nothing can be accomplished and no one will be interested in investing in your business, either.
Distrust occurs when your business plan is unrealistic or vague, contains unfounded claims of success or ignores the competition within the market. Be straightforward about your plans for the company, be honest about the risks, and, of course, keep your projected returns optimistic but realistic, as well.
#4 Not Allowing for a Buffer
You can’t expect your business to be an instant success that is churning out a profit from day one. It takes time to start seeing a plus sign at the top of your revenue charts – on average between five and 15 years. Make sure to have these figures in mind when crafting your business plan so that you will be covered through the rocky startup period. Know where money will need to be allocated, including the setup of a new location, purchase of materials, employee bills and other common business expenses.
In short, when crafting your business plan, be thorough, be well researched, be honest and be clear. That’s what investors are looking for, and in what they will be most likely to invest.
With a solid business plan in place, you can be confident that raising capital will not be difficult. Of course, if you do have trouble getting investors, you can always try some more innovative ways to raise capital.
If you are also considering the possibility of taking out a business loan, make sure to get all of the industry-relevant information you need to stay on top of the game and ahead of the competition now.
Suggested Reading: Show Me the Money: 3 Reasons to Take a Business Loan.