You might have heard that the best way to get funding for your project form financial institutes and investors is to write and draw up a very good and detailed business plan to present to them so they know what their money is going into but then, it would further surprise you that a mighty lot of business plans usually get rejected.
You might have even read it here on WEST ENTREPRENEUR FORUM where we have recommended you start out with a business plan but along the line, you see that everywhere you go with your plan, no funding comes forth. Why are investors turning down your business plan and failing to go for your project? Below, we identify the top seven reasons for that.
1. Are you filling a need?
The success of a business is largely depended on whether such business has seen a need and is planning to fill that need. When your business is just like any other which can be seen on the streets and doesn’t have any special and realistic need in mind to fill, no one would want to waste their own money in your business. The greater the need your business wants to fill, the better for you to get funding. See a need, fill a need.
2. Zero competition
Many start-up entrepreneurs think it is a thing of flattery to themselves and a means to encourage investors to fund them when they state in their business plan that they have no competition. On the contrary, this would make your investors think that you don’t know what you are doing as you have charted into a market where another business has avoided and you are bound to fail, with their money in hand, and they wouldn’t want that.
3. Jack of all trades
If you think that putting in a lot of services as add-ons to your business plan would fascinate investors, you could never have been more wrong. It is better to have a niche in mind and focus on it than be a jack of all trades and master of none. Pick a niche, research, and present. Later, you could start to seek expansion.
4. Poor marketing strategy
Your business plan should tell investors how and what channels you hope to take your sales through. A poor marketing strategy already spells a very low return on investment. Make sure your plan is packed with marketing and distribution strategies that are practical and efficient.
While writing your business plan and in a bid to impress, you might want to start using all these business vocabularies and technical terms which would hurt you with investors. It is advisable that you use core technical terms pertaining to the business so that they know you’re versed in the business, but overdoing it is just out of the question. All they need to know is the problems it solves and the customers it caters to.
6. Absence of risk analysis
Even at Abode Business, we never forget to remind you that all business has their own risks and there are ways to manage and minimize them. Therefore, if you have written your own business plan like a paradise without risk management tools, you are clearly not equipped to handle crises and investors won’t fund you.
7. Over-the-moon financial expectations
An expectation is supposed to make profits but when calculating your future profits/ projections, make sure you keep in mind the unpredictability of the market. putting a high figure on your business plan of projected income just to impress investors is a poor business strategy on its own, and they would see through the lie.