5 Business Plan Mistakes: How to Avoid Them By Paul A. Broni If you are preparing to raise capital from either an investor or a bank, you’re probably writing a business plan. Here are five of the most common mistakes that I have seen as a result of my experience as a commercial banker ancorporate! finance consultant" Submitting the Plan to the Wrong People I have actually hearentrepreneurs say, #I on’t know why I can’t raise any money. I’ve sent my business plan to hunres of people$# %on’t make this same mistake. • &ou shoulfirst etermine that your prospective investor or lener has an interest in your inustry anyour business. %o this by making a call or sening an introuctory letter or e!mail. If you can receive a referral from an accountant, attorney, or banker, that is all the better • 'ever, uner any circumstances, shoulyou senan unsolicitebusiness plan. (hese are put at the bottom of the pile, anthey are selom reaor given serious consieration. If you etermine that your prospect has an interest, senover only the executive summary for review, unless otherwise re)ueste.Inomplete !"eutive Summar# (he first thing that all prospective investors anleners will want to reais your executive summary. (his section shoulbe no more than two pages, but three is the absolute maximum. *hen you write your business plan, the executive summary shoulbe preparelast. +After all, how can you summarie something that has not yet been written-(he summary shoulbe broken own into five sections, each of which shoulbe no more than one or two paragraphs long. (hese five sections are" • The $pportunit#" %escribe the neethat is currently unfillein the marketplace/ if the neeis being fille, iscuss how it is not being ae)uately met.• The Solution" %escribe your solution to the problem, anwhy it is better than what is currently available.• Management" %escribe why you anyour team are )ualifieto eliver the solution that you have propose. • Market Si%e and Share !"petations" %escribe how large the market is for your solution, aniscuss how much of that market you intento capture. • &inaning 'eed and !"it Strateg#" %escribe how much money you neeanwhat it will be usefor, but close with how you intento provie the investor with an exit strategy.
