Bangalore: Whether it’s a startup or a growing business, a well thought out business plan is an essential tool to draw potential investors. Investors usually mull over the business plan to pick the company for investment as it divulge the business concepts, information, market strategies, designs & developments, competition analysis and financial information.
If you are a startup, planning to run a fruitful business with no snags, developing a coherent business plan is vital. A solid business plan, by exposing the every facet of the business provides a clear road map for future success and helps raising fund from investors while also serves like an aide for startups to take a right decision. A plan pierced with errors sinks entrepreneurs’ even when they have incredible ideas, services, sales plan, customers, management team and internal operations.
While building up the most important information in your business plan, you should make sure that you don’t commit following business plan mistakes-
Going too long or short
“One of the major mistakes that young entrepreneurs make in their business plan is going too long or too short”, says startup entrepreneur, Kunal R. Sachdev, CarvanCraft. It’s always good to develop a business plan in a preferable and precise manner. There is no hard rule for business plan about how long it should be, but the information included in the plan ought to be useful for investor to take a decision.
Usually, the investors have no time to read business plans of over 40 pages. They prefer the plans of 20-30 pages that convey the ideas and future plans in an unambiguous manner.
Getting distracted by taking many opinions
Trying for excellence by taking advices and opinions from experienced entrepreneurs are good for the company’s success. But, taking too many opinions from a ton of people and coalescing all in a single path can delay your project and it may lead to distraction. In a startup stage, getting distracted by shiny objects - which are not a part of your business, is usual. Keep in mind, sometimes good may be the enemy of great. To be free from distraction, pick one solid advisory or business model and focus on the same.
Failing to weigh the market
“Being in love with business or product development and failing to weigh the market is one of the biggest mistakes that young entrepreneurs make”, says, Pranay Agrawal, CEO of Cubito.
According to him, ignoring the road blocks that entrepreneur could face while raising their business from the ground up if they underestimate or over estimate the market is yet another challenge.
Weighing the market is a vital task for entrepreneurs, mainly startups who seek the funding from venture capitals. Even if you do not seek third party funding, keeping an active eye on the business market will help to arrange strategic issues like selecting legal representation and a lender. It won’t affect daily business drastically, but if the entrepreneur fails to monitor the market trends from the day one, by the time the entrepreneur realizes the mistake, it could be too late to resolve.
Further he added, “Being in love with your business or product is amazing. But at the same time entrepreneurs should ensure they have an objective eye open for all sorts of issues that can crop up. Monitoring in-flow/out-flow of funds closely, keeping an active eye on the market- market trends, small experiments to validate your assumptions are various ways to ensure you can be ready for the uncertain path that a Start-up goes through”.
Being too vague
Believe it or not, being too vague will break the accords with venture capitalists and investors. To keep the business information furtive, as it includes confidential and technology matters, many startups business plan will be too vague and boring. Many investors will show disinterest to sign in agreement as expect to cover all the focal points. In such case, before presenting a business plan, explain managerial summary where there is no confidential information. If they show interest towards your business, show them clear business plan by making them to sign on nondisclosure agreement.
Choosing wrong investor is other mistakes that startups make in trying to meet the actual investor. When business gains some success grip and holds growth mode, startups plan to raise capital from outsiders. But remember, raising the fund from the right person is the key for success. Arun Anandagiri and Ameya Kunte, Co-Founders of Taxsutra Services say “Conveying/convincing your business plan to a potential investor can get a little tough, when the investor is not from the same domain. If you choose the wrong investor, they would surely badger you with questions on the scalability of your ideas presented in the business plan”.
Spending too much or too less
It’s very hard to build a great company with products and employees without spending money and it’s obvious that how too little money could kill the business. Distinguishing spending too much or too less is probably hard. Many young startups suppose that money is the most important term for running a successful business. What they often forget is that spending valuable resources on hiring a lot of employees in start-up stage will burn their business. If your business makes successful returns, no matter how much you spent. This too much spending may bite you hard and slow you down.
Pranay Agarwal, CEO, Cubito says, “Spending too much or too less is another major mistake that startup makes”. If you don’t keep your eye firmly on the inflow or outflow of money, you will likely run out of business before your success.
Arun Anadgiri, CEO, TaxSutra Services says, “There is a tendency while preparing the business plan, to focus on cost optimization; which is as important as revenue maximization”.
Despite the fact that making a few mistakes while making business plan with lack of experience is typical - try to avoid making mistakes by doing proper research to grab success. Writing a business plan with proper sizes, shapes and formats, with appropriate brand logo are important for revenue maximization.