via Forbes: Nobody gets funded by spilling their brilliant idea to a stranger at the airport bar who turns out to be a secret venture capitalist just itching to invest. You need a business plan if you’re going to be taken seriously. Don’t skimp on it or fall into common traps. Investors can smell garbage a mile away.
I’ve personally reviewed hundreds of business plans and helped startups create killer plans that are designed to deliver information, make projections and keep investors interested. Ready to take your business plan to the next level? Here’s what not to do.
You Substitute ‘Cool Factor’ For ROI
Unless your product is innovative new mountain gear or a pill that magically cures altitude sickness, investors don’t care if you summited Denali. Too many times, I see entrepreneurs humblebrag about living with hill tribes in Nepal when it has absolutely nothing to do with their business.
Investors aren’t your friends. The cold truth is that they don’t really care that you’re PADI certified or fluent in Cantonese unless it directly relates to their bottom line. They want to see that you understand the market, are scalable and will provide them with ROI on their business.
This isn’t to say that you shouldn’t show personality in your business plan. Please do! Just remember that the objective is to get people excited about your business, not you as a person. Show scalability, ROI, and a solid plan first, then add some personal touches if you’d like.
You’re Either Too Detailed Or Too Vague
You don’t want your business plan to read like a technical manual, nor do you want it to be nonsubstantive fluff. Some entrepreneurs go really heavy with the charts and graphs, using 10 diagrams to spell out what could be explained in one.
On the flip side, others will forgo data in favor of intangible items. This is especially true for companies that have a noble mission and rely heavily on the “halo effect” of being associated with their project. They sometimes expect investors to jump on board because their mission is so compelling and necessary, but that’s rarely the case.
Also, make sure that people don’t need a Ph.D. to understand your business plan. Write clearly, in layman’s terms. Have a mentor, coach or trusted friend read through your plan and tell you if they had any problems understanding it.
You Don’t Show Demand Or A Viable Market
Sometimes we have the best idea ever … for a problem that doesn’t exist. Do your due diligence when conducting market research and remember to keep a sharp eye out for cognitive bias. You might be so convinced that your idea is the one that will change the world, that you’re willfully ignoring any evidence to the contrary.
You need to show that you’ve done market research and there are people who will consume your product or service. You need to fully understand their pain points and how to solve their problems. Without a market or demand, you don’t have a company.
Identify your demographic and conduct surveys, focus groups and research to really drill into what makes them tick and why your product would solve a universal need. Make sure you know who your competition is. The more you know about your demographic, demand and competition, the better positioned you are to be successful.
You Haven’t Checked Your Spelling Or Grammar
This should be a no-brainer, but I’ve seen dozens of business plans that contain errors that a simple spell check could have prevented. It literally takes less than five minutes to run a grammar and spell check on your completed document. Do it. Simple errors can completely ruin an otherwise perfect plan.
Think of it this way: Why should an investor trust you with their money if you’re making rookie mistakes with your spelling? If you’re careless enough to let grammar and spelling slide, why would you be careful with their investment? Why should they trust you to provide the ROI you’re projecting?
Proofread your business plan before you present it to anyone. It’s an important step that you can’t afford to miss.
Your business plan is a physical representation of your company on paper. Treat it with the respect it deserves, and you’ll notice that other people will do the same.