If you want to secure investment for your new venture, you'll need to have a detailed business plan. A clear vision of the goals of your company for the first three years of trading can impress potential investors and also make it easier to get suppliers and partners on board.
You can find lots of excellent advice on how to put together a world-class business plan in the pages and forums of moneysupermarket.com
, but in the meantime here are the ten most common mistakes that entrepreneurs make.
Experienced investors will usually read an executive summary before deciding whether to read the business plan in full. Ensure that yours is concise and well crafted.
No one expects you to be the world's greatest writer, but a plan that is riddled with spelling and grammatical errors is a big turn-off. Have your plan proof-read before submission. In a competitive market, you can't afford to make silly mistakes.
Pie in the Sky
Regular humiliations on programmes such as Dragon's Den and The Apprentice show just how easy it is to get your figures badly wrong. Nothing makes a business plan seem more amateur than projections that have no basis in reality.
Ignoring the Competition
Many business plans try to gloss over the competition but this may make it appear you have failed to consider your position in the marketplace. Investors may see a total lack of competition as a potential sign that a market does not exist.
Plug the Credibility Gap
Ambition is a good thing but if you've never run a business before, you'll need to prove to investors that you are able to do so successfully. Alternatively, split your business into smaller stages and show how you plan to build on your success.
No matter how great your business idea may be, no investor will believe that word of mouth alone will take it to the top. If you fail to budget for adequate marketing costs, you will stumble at the very first hurdle.
A business making huge profits will still go bust if it runs out of cash. If stock needs to be paid for before orders can be fulfilled, you need to ensure your plan shows how you will handle this.
If your business involves designing apps for smartphones, producing gourmet meals for home delivery or providing specialist services, it's likely that your expertise lies in these areas rather than in the world of finance. Investors will be more likely to go ahead if they see someone on your team with solid financial experience.
No Threat Assessment
What happens if a rival firm launches a similar product or service? Or if new technology could put you out of business? It may seen counterintuitive to include negative scenarios in your plan but failing to do so leaves you vulnerable to difficult questions.
Discarding after Launch
A good business plan will do more than secure investment - it will also serve as a road map for your first three years of trading. Rather than discarding it after launch, use it to keep an eye on your goals.