03 Jan How To Avoid Business Plan Mistakes
How To Avoid Business Plan Mistakes
Show them the right business description, and you will raise more funds than you need and certainly avoid any business plan mistakes. Some of the best crowdfunding projects are able to raise up to 100 times what they’ve targeted based only on a product description and no business model. This shows how critical this part of the business plan is.
You’ve already persuaded yourself, so you’re on the right track to persuade others. You already have what it takes. You just have to effectively communicate it.
Before you start writing, you will have to do a little introspection and ask yourself questions to help you dive into your original idea. Try to relive that special feeling you had when you convinced yourself you needed to start your business.
- What passion brought you to start this venture?
- What is the sparkle that ignited this fire inside of you?
- What shift have you experienced that turned you into a believer?
- What opportunity have you discovered in your market?
Once you got it, don’t let go and don’t underestimate it. It is the soul and backstory of your business, and if you communicate on it appropriately, you will be able to convince and inspire others. Use that inspiration throughout writing the different parts of the Business Description, whether this shift was about the industry, the company (more rare), or the product itself.
Crafting Your Business Description
Let’s take an easy analogy to picture how to best convey your message: your business is like a
sailing boat, and you want to show how your boat will reach its destination despite the external influences.
Your business description needs to be divided into 4 different parts:
- Industry description
- Company description
- Product description
- Business concept
Investors want to have a clear picture of the type of environment in which the business will grow and want to be sure you know where you’re going. Is it an ultra-competitive industry? How open is your market? Will you be able to put up barriers for protection? How far ahead can you anticipate the evolution of your industry?
It should include a picture of the different markets and the key actors. Try to summarize the opportunities and threats that currently exists and how they will evolve in the future.It is of the utmost importance that you base your research on
It is of the utmost importance that you base your research on the reliable information you can confidently reference. Guesses and hunches do not work for investors, and it would be a shame to lose them over the reliability of your sources.
The industry is the sea on which your boat will sail. Is the sea going to be troubled in the future? Will the wind blow strong enough? Consider all these elements when writing the rest of this chapter.
This part is quite straightforward. State how you’re going to cater to your market (i.e. retail, services, wholesale, etc.) and if it’s a new or an already existing market. Also, state your legal structure and why you chose the specific structure.
List the partners and what they’re bringing to the company. Do not spare any relevant details as it can be a strong case to trigger confidence among investors. For example, if one of your partners has 30+ years of experience in the industry or has had already many business successes, insist on how it’s a clear advantage to have that person onboard.
This is where you sell your product. Describe precisely what is it you’re selling. Does your product have a special feature? What is its purpose and what are its perceived values? How is the product going to be different from what’s already on the market? Don’t spare details. This is what your business is all about.
Investors want to know that your business can generate money. Based on all your previous descriptions, show how your industry, company, and product work together for your business to yield a profit.
For example, you might evolve in a highly competitive market but might have 30 years of experience in that market and have an amazing relationship with a supplier, or you might have a disruptive product that will completely reset your industry and actually create your own market. Whichever your case is, list all your competitive advantages (your company and product in relation to your environment) and describe how they relate to the success of your enterprise.
Reassure the investors that their funds will be used efficiently to generate even more money, thus allowing you to remunerate them handsomely.
The business description is the cornerstone of your document. Who you are and what you sell is at the very core of your business. You have one chance to make a good first impression on your investors, so make sure that this part is on-point and perfect!