Business Plan – 5 Signs Your Plan Will Come Up Short With Investors

Without further hesitation, here are 5 signs your business plan will come up short with investors:

Sign #1: You’re Selling What?

You know what you sell. But has your business plan clearly and concisely described those products and services? Too many business plan writers make the incorrect assumption that the reader is as familiar with their business as they are. Unfortunately, this assumption leads to a quick and final “no” from lenders and investors.

Instead, define and describe your product for someone who knows nothing about your industry. Be sure to include not only the features of your offering, but also the benefits. Tell the reader what need it fills, why it’s better, faster, or cheaper or how it can improve their life.

Sign #2: “I Sell To Everyone!”

Do you? More than likely, you sell to a very specific group with the need and desire to purchase your product or service. Understanding your target market can be the difference between success and failure. It allows you outline the benefits important to your clients, enables you to focus your marketing efforts to reach the right audience, and forces you to determine the most cost effective channel to get your product in the hands of paying customers.

Define your customer in as much detail as possible, including demographic traits as well as more subjective items such as lifestyle and personality types.

Sign #3: Your Competitors Know You Exist

A business plan lacking a comprehensive competitive analysis is destined for the trash can of most investors. In order to avoid this fate your business plan should include a thorough analysis of your competition. Experienced capital sources know that competition exists, but they also know that competitive forces can have a very positive effect on a company’s attitude and performance. Remember, Coke has Pepsi, Microsoft has Apple, etc. Be sure your business plan identifies who your competitors are, what they sell, what market share they hold and their strengths and weaknesses.

Sign #4: Even Batman Had Robin

No one ever said running a company was easy, and with the lack of hours in a day (only 24 hours as far as we can tell), a well rounded TEAM of people is often critical to the success of a company. Most capital sources view one-person operations as limited in terms of time, experience and core business skills necessary to launch and grow a serious business. They also expect a team of professionals that are highly competent in each business function (marketing, sales, operations, finance, manufacturing, engineering, etc.). Once you have assembled your team, be sure to provide your business plan reader a thorough description of the background and job responsibility for each, along with a discussion of your board of directors, board of advisors and key consultants.

Sign #5: An Exit Strategy – Without An Exit, Or A Strategy

A business plan is an excellent tool to plan a business or to raise capital. However, when seeking capital don’t forget that an investor’s commitment hinges upon their ability to recoup their initial investment and a healthy profit. The lack of a solid and realistic exit strategy demonstrating how investors will accomplish this goal can immediately turn off many sources of capital.

When deciding upon an exit strategy, be sure to take into account your particular industry, business life-cycle, competitive environment, and management needs. It’s also important to consider your personal and financial goals, and how they relate to the future of your business – without forgetting that an exit strategy must meet the needs of the person who will ultimately write you a check.