Entrepreneurial mistakes that make business plans die or projects be rejected
After cultivating a business idea and opening a small startup, many entrepreneurs figure out that financing is an important factor in order to make a promising debut.
In order to gather the necessary money, you need to build up a realistic and exciting business plan which must clearly show the sponsors, bankers or companies, the manner in which you want to enter the marketplace and also the way you want to reimburse their investment.
However, it happens quite often that the investors believe that your business idea is unrealistic, incomplete or simply unworthy.
This article aims at revealing a couple of mistakes the entrepreneurs make when they present their venture plan to the investors in efforts to get financial resources.
1. Implementation of idea – not everyone use to conceive a business plan and document thoroughly
The bankers advise entrepreneurs to consider the following aspects before starting a business:
– research the niche, industry size and particularities
– check the marketplace where the intended business operates (portfolio extension, competition pressures)
– implement properly product distribution methods;
– think about a marketing/advert budget. Starups rearly have a suitable promotional budget and do not always take into account the importance of the free advertising environment such as the social media.
2. Lack of financial knowledge: this is an issues can normally be fixed by getting in touch with an economist or accountant.
As a rule, this deficiency is related to: supply and providers, cash flow, payment methods, guarantee letters, insurances, high rates of indebtedness, repayment inability;
3. Inexperienced entrepreneurs have troubles in making up management team
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4. Insufficient management and technical experience in the business niche
5. Failing to make difference between product management and accounting
Unfortunately, not all entrepreneurs are concerned about financial performance, process management or analysis of financial indicators;
6. Ignoring evaluation of asset quality
Bankers recommend entrepreneurs to use expert opinions, even if it seems expensive.
7. Entrepreneurs do not always know how to grow and expand a startup business
Nor have consistently tried to make a network of clients and to manage it effectively. They often fail to implement and exploit recommendations
8. Startup founders need a spare budget…
… which aims at covering the operational costs for a minimum period of 3 to 12 months (depending on the industry) and tackling unforeseen situation (even if there is a well-developed business plan).
9. Most common mistake entrepreneurs do, is to confuse own pockets with company’s account; as a general rule, the first profits need to be reinvested into business. Withdrawing money at very early stage would leave the company’s budget low leading to the collapse of the business.