Your business plan is often the first impression you make on investors, and it could also be the last impression the inverter gets if you make the kinds of mistakes illustrated here. If you don’t get a referral, your business plan is how the investor will judge whether or not to invite you to the office for an in-person meeting.

With the hundreds of “opportunities” investors get every month, they are looking for ways to say no. Therefore, you mustn’t make a lot of mistakes. Every mistake will hurt your chances.

 .The following list of examples is from Cayenne Consulting.

 Content mistakes

Failing to identify a real pain

Identifying and solving real pain that customers are willing to pay to get solved is not necessarily easy. Check out these posts: https://harborcapitalgroupinc.com/the-critical-first-step-toward-new-product-success/ and https://harborcapitalgroupinc.com/part-two-how-to-get-product-validation-and-commitment/

 On the other hand, pain is synonymous with market opportunity. And the more widespread the problem is, the greater your potential market. Businesses and consumers pay good money to make pains go away. Your business plan is how you tell this opportunity story.

Overstating the impact your company will have  

Phrases like unparalleled in the industry or unique and limited opportunity or superb returns with a limited capital investment are only hype. Investors will determine your company’s impact based on their specific criteria.

You should simply lay out the facts: the problem, your solution, the market size, how you will sell the product, and how you have a competitive advantage and will keep it.  

Stretching the potential uses of your product  

To impress investors, entrepreneurs often try to show that their product can be applied to multiple, very different markets or explain they can have a complex suite of products to bring to the market.

They don’t realize that most investors prefer to see a focused strategy, especially for a very early-stage company. Investors want a single, superior product that solves a big problem in a  large market sold through a proven distribution strategy.

Additional products, applications, markets, and distribution channels don’t have to be left out;  they can be used to enhance and support a highly focused core-strategy. Tell your core-story and let everything else play a minor role.  

No, go to market strategy. 

Business plans that fail to explain the sales, marketing, and distribution strategy are doomed. Be sure to answer these questions: Who will buy it, why, and most importantly, how will you get it to them?

Also,  explain how you have already generated customer interest, obtained pre-orders, or better yet, need actual sales. And describe how you will leverage this experience through a cost-effective go to market strategy.

We have no competition.

No matter what you think, you have competitors. Maybe not a direct competitor who offers an identical solution but at least a substitute. First-class mail is a substitute for email.  

Competitors, simply stated, consist of everybody pursuing the same customer dollars.

To say that you have no competition is one of the fastest ways you can get your plan tossed. Investors will conclude that you do not have a full understanding of your market. The competition section of your business plan is also your opportunity to showcase your relative strength against direct competitors, indirect competitors, and substitutes. Besides, having competitors is a good thing; it shows investors that a real market exists.

Your business plan is too long.

Investors are very busy and did not have the time to read long business plans. They also favor entrepreneurs who demonstrate the ability to convey a complex idea’s critical elements with an economy of words. 

An excellent executive summary is no more than 1 to 3 pages. An ideal business plan is 20 to 30 pages, and most investors prefer the lower end of this range. Remember, the primary purpose of a fundraising business plan is to motivate the investor to pick up the phone and invite you to an in-person meeting. It’s not intended to describe every last detail.

Document the details elsewhere in your operating plan, R&D plan, marketing plan, white papers, etc. 

The end of part one. This information is a lot to contemplate. That’s why we divided this vital block of data into three parts. Be sure to read part two, which covers more things to avoid doing, and part three covering financial information.