10 Things Which You Shouldnt Write In The Business Plan
Some words about a taboo for business plans.
1. The description of existing products and services. It is necessary to do homework — but be not overzealous! Very many business plans have unreasonably big size. If the potential investor “will not understand” into a theme for the first some pages, following fifty more will not help.
2. Data on «members of an administrative team» which actually do not enter into it. People either work together with you and enter into a command or are not present. Be cautious with “advisers” — investors often express desire to communicate with them, therefore be convinced that they are in a course of your business. And one more: contrary to a popular belief potential investors often at first read biographies instead of an analytical note, after all they put up money in people instead of in business plans. So try to characterise members of the command fairly.
3. Type phrases «absence of a competition», «a product (service) which does not have analogues», «the huge market», «simplicity of realisation». The competition is present always as well as chances of existence of similar products or services. Huge the market can be only short time and business project realisation never happens idle time.
4. The marketing plans assuming that everybody is ready to buy your idea when necessary and under any price. Lean against realistic assumptions!
5. False biographies of founders, directors etc. Be truthful!
6. Expressions like financing is promised or is discussed. Either you have already agreed about financing (and have received means) or are have not. The third variant is not given.
7. Financial forecasts with breakdown only on years. Make the monthly forecast for the first year, separately having shown initial financing and operational expenses and then quarterly breakdown for 3–5 years. Show how and when return of the enclosed means will be provided at success of the project. Show when the put up money will return to them.
8. Insufficiently exact analysis of the market. If you cannot estimate the market in quantity indicators from the point of view of prospects, customers, a market share etc. it means that you do not understand a situation in this market to the end.
9. Approximate operational expenses. If you are going to make and sell a product or service independently you should imagine all expenses — straight lines, indirect, constant and variable, and also expenses for outsourcing if you plan to employ other organisations.
And at last, the main point which in no event cannot be included in the business plan.
10. The financial indicators forming a curve in the form of an ice hockey stick. The J-shaped curve of the gain falling in the beginning of the project and infinitely growing in future looks not realistic and says that you insufficiently well understand features of the competitive environment, a situation in the market and an alignment of forces. If your business idea is so good someone for certain will try to copy it. Consider also it! Customers will come and leave, competitors — to appear and disappear and your incomes will not grow infinitely. It is fine dream but in a life such things do not happen!
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