Five Common Mistakes in Business Planning
Here are five mistakes that often occur in the preparation of business plans with respect to submission of a loan and attract investors, namely:
1. Too much information
Is the business plan which consists of 25-50 pages is better than 200 pages? The answer is “YES”. Most lenders and investors will focus on some specific points to see the business opportunities offered, so that the business plan that is too thick, allow not read and boring.
Keep in mind, that your goal is not to create a business plan showing the reader on the breadth and depth of your knowledge, but to show the key elements of a business plan that gives hope for the future is bright for the business.
If there is information that can not be separated from the business plan, should be pasted on the back as an attachment to supporting information readers.
2. Hide the weaknesses of the business
Some thoughts that are believed by the authors failed business plan, because they often hide the weakness of business. For example, “Why do we write something that would give a negative impression” or “after we get the funds, we can handle the weaknesses that exist”.
If the author is a business plan then hide the weakness of his business failed and he is potentially fatal in its efforts. Meanwhile, savvy investors will find the answer may be in the first 10 minutes, then arises the question on the minds of investors, “What else have not you tell me?”
When you have lost the element of trust, then it has gone the chance to get funding. The best way to handle the weaknesses of the business is to explain the weakness of existing and effective plan to address weaknesses in question.
3. Channels of distribution are not clear
The business plan should explain how the products and services effectively to the intended market. Unclear distribution system, resulting in inhibition of products and services to customers. Ultimately can threaten business continuity.
Below is an example statement that informs the investors that the product does not have a clear distribution system would threaten business continuity.
“We will be marketed our products over the internet, distributors, agents, wholesale, direct selling, retail outlets, telemarketing,”
4. Weak competition analysis
List the name and address of the existing business competitors is not enough. Investors are very interested in knowing what you know about business competitors. Eg business strategy, core competencies, distribution system, advantages, and disadvantages they have. Knowing only a little about your competitors, is proof that you did not prepare properly the business, including the conduct of business competition.
5. The financial projections are not qualified
The financial projections are not supported by adequate analysis and forecasts will provide the investor distrust.
The business plan must prove to creditors and investors that the company is able to pay back the loan and generate attractive returns.