Seven Critical Mistakes You Don't Want To Make In Your Business PlanWritten by Dee Power
If you're looking for investors, you need a business plan and not just any business plan. You need one that is well crafted, concise and exciting. But how do you know what venture capitalists want to see in a business plan and how can you avoid what they feel are top seven critical mistakes? We asked venture capital companies across United States how they evaluated business plans presented to them. The VCs were asked: What is worst mistake an entrepreneur can make when completing their company's business plan?Seven Critical Mistakes 1. Lack of Clarity ********************** VCs believe that entrepreneurs are not clear in explaining opportunity. Why business made sense, why business model would be successful. Entrepreneurs can avoid this mistake by simply asking several people who aren't familiar with their company to read business plan. If they don't "get it", it's unlikely an investor will. 2. Unrealistic Projections ****************************** In second place is a mistake that is difficult for entrepreneurs to avoid: unrealistic projections. While it's true that company must produce enough revenue to be able to generate 30% to 40% yearly returns that VCs expect, those projections have to be reasonable and achievable. Apply common sense. You can get an idea of whether your projections are in ballpark by looking at annual reports of public companies in your industry. 3. Simplistic Assumptions ************************* Simplistic assumptions are closely related to unrealistic projections. Avoid 'all tea in china' syndrome. You know logic of 'there are 80 billion Chinese people, if we sell just one tea bag to only 10% of them we'll make a lot of money'. Justify your assumptions, base them on as much research as you can.
| | Easier is HarderWritten by Dave Balch
Is your business as easy to operate as it could be? Is everything as efficient as it can be? I can tell that you're thinking, "What got you started on this one?"Horse manure. Horse manure? Horse manure! Since we live in mountains, turnout area for our horses is not level by any stretch of imagination: it is roughly shape of an amphitheater with barn at lowest point. I was, uh, "picking up" after horses, which involves walking around with a "manure fork" (which looks like a pitch fork), scooping up piles, and dumping them into a plastic barrel that I pull around in a little two-wheeled caddy. As you can imagine, barrel begins to get pretty heavy after a while, and pulling it up slopes becomes a chore. But… it would be much easier if I cleared highest points first and then worked my way down. That way, I haul an empty barrel up hill and, as it gets heavier, gravity will help me out as I work my way down. It's a perfect solution that takes no extra time. Pretty obvious, huh? Whenever we feed horses they get pretty riled up and anxious to eat, and start pawing and banging while we measure out proper amounts. But… if we prepare food in advance we can feed them as soon as we get there. Then we prepare next meal while they are eating that one. It's a perfect solution that takes no extra time. Pretty obvious, huh? The copies come out of our copier face up. That means that if we copy a 10-page document, we have to manually rearrange copies because page 10 is on top instead of page 1. But… if we copy pages in reverse order, they come out just way we want them to. It's a perfect solution that takes no extra time.
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