Have you ever written a business plan before? Your business plan is the first impression any potential investor will get about your venture. Investors go through numerous business plans each year, so you need to ensure that your business plan stands out and has the wow factor. Your business venture could have an excellent product, team, and customer base, but if your business plan doesn’t highlight these correctly, you will face rejection. Investors look for many reasons to say no when they look at business plans, so you need to make sure you give them every reason to say yes. So, let’s look at some of the reasons why business plans don’t receive funding. These will help you ensure that you leave a positive first impression on investors by avoiding these common mistakes.
Not Identifying Competition
One of the common mistakes entrepreneurs make is not identifying competitors or mentioning that they don’t have any competitors. While they think this will fascinate investors, in reality, it sends wrong signals. Be careful when you say there are no competitors for your business. Competitors can be direct or indirect. In your business plan, you should address both types of competitors. Furthermore, once you have identified competitors, layout the USP and how your product or service is different or unique. This will help investors understand how to plan to overcome competition in the market.
No Marketing Strategy
Business plans that cannot explain how a business will market, sell, and distribute products or services will fail to convince the investors that they will sustain in the market. Business plans need to provide answers to pressing questions investors could ask. Some critical questions to answer in your business plan include:
- Who will buy the product or service?
- Why will they buy it?
- How will you get the product or service to the target customer?
When detailing the marketing strategy for the business, you will need to explain how you will generate customer interest and make actual sales.
Not Filling a Need
The key to any business’s success is its ability to fill a need or solve a problem in the market. If the business plan doesn’t demonstrate how the company will fill a need, the plan will likely face rejection.
People are ready to pay good money to have their needs filled and pay for a solution to the existing market gap. The greater the pain and the better your product is at alleviating it, the greater your market potential. If your business plan doesn’t explain what needs your business will fill and how you will fill that need, it will be tough to convince investors.
If your business plan is too technical with a lot of jargon, there is a high chance that the readers will not understand it. Business owners often write their business plans with industry-specific terms that are often confusing to potential readers. The key here is to keep the business plan simple and easy to understand for potential investors. Try to avoid highly technical discussions of the product or market that potential investors may find confusing.
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