How To Prepare A Business Plan: Top Mistakes To Avoid
To assist in your business plan preparation, avoid these three mistakes commonly made by entrepreneurs
.Looking Only at Competitor Weaknesses
Readers can see if you are doing this in a second. For example, if you mention a competitor business who has been in business for twenty years and is the top seller in the market, it is not believable to cite only its problems. Clearly, it at least has a brand advantage and familiarity with customers which will be tough to overcome. This business in question obviously has something more going for it than its longevity. Businesses dont stay around that long without having strengths of their own.
Any Experience Is Good Experience
Any work experience you have is not necessarily the experience funders want to see in the leader of the company. Some of your work experience may be totally irrelevant to the business plan. Use the rule of thumb that any experience you describe should be related to one or more of the following: entrepreneurial experience (starting businesses, projects, products, or services), industry experience (in the industry of the business in question), or functional experience (in sales, marketing, operations, finance, etc. depending on what your functional responsibilities will be).
Running Too Lean on Cash
While it may seem natural to request as little cash as possible, it is more appropriate to request enough cash to allow for ample cash reserves, equal to perhaps a few months worth of operating expenses. The fact that these cash reserves are build in is apparent in the cash flow statement, where the ending cash balance of any month should not fall below this value. If the cash balance is shown running down to $1,000 or $500, funders will suppose that it could just as easily be at negative $500 at this point, meaning the business may go bankrupt because of lack of capital rather than problem with the basic idea.
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