Business plan mistakes to avoid

Don’t do the following

Declare no competition

Some entrepreneurs get carried away with their zeal to demonstrate the barriers to entry that set their company apart from others. A “barrier to entry” is confidential information or knowledge, or a set of experience from a management team that no one else can claim. The factors that make your company stand out are attractive, but in reality, no business has competitors.

The Industry Analysis section of your business plan should show the size of the industry in which you compete. Market analysis will reveal a subset of the industry you are focusing on. Competitive analysis should show the strengths of your competitors and how you will overcome them.

In other words, you can eat your cake and eat it. You must show that there is enough competition to convince investors that the market is big enough to make big bucks, but that your strategy is focused and unique enough to take an exclusive path through the waters of that competition.

Use first mover advantage as your main exit strategy

Companies whose only exit strategy or payout point to investors is to flood the market with a new product or service and then sell the company a year later will not find worthy investors. Everything moves too fast in the information age. Investors need a company that can grow rapidly but consistently in stages. They look for business plans that demonstrate a sober, realistic outlook and financially responsible exit strategies.

Target just one big company to end up buying your smaller company

For example, if your company is developing new software, don’t put all your eggs in the Google and Microsoft basket. If your exit strategy from your business plan relies on your purchase by a larger company, provide parallel case studies. Provide sufficient evidence that the conditions for your company are the same as for the successful sale of the companies in the case study.

Also, show why a larger company is unwilling or unable to develop the same product in-house.

Let’s be clear:

Do not Declare no competition

Do not Use the first move advantage as your main exit strategy.

Do not Only target one large company to end up buying your smaller company.

Avoid these business plan mistakes and your path to finance will be much easier. Be sure to postpone your business plan after completion for a few days and revisit it with a fresh eye.

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