Before you approach a bank or an investor, you need a comprehensive business plan. Business plans are one of the most difficult things for first-time business owners to setup; not only do they need to include a tremendous amount of financial information, but they also need to show considerable business acumen. Here are a few of the top mistakes that business owners make when constructing their first plan.
1. Thinking They Have to Do It On Their Own
Part of owning a business is knowing when it is most prudent to outsource. Business owners may feel that they should be able to construct their own business plan because that means they know their business well -- but there's a reason why business owners hire accountants. Sometimes having a professional review and revise a document can be extremely beneficial, especially when courting individual investors.
2. Looking at the Wrong Resources
A business plan for a company in the retail industry is going to be vastly different from a business plan for a restaurant. Industry matters, as does the size of the organization and its geographic location. Business owners have to look only at the resources that are most applicable to their business, which are usually going to be available through their local branch of the Small Business Association.
3. Failing to Do the Market Research
It's easy to assume a business plan deals only in finances. But business plans are actually about half finances and half marketing. Business owners cannot assume that they are going to get a certain number of customers or that these customers are going to make a certain amount in purchases; they absolutely need to do the market research in their area before they can make any assertions. An investor will ask where the numbers came from.
4. Not Paying Attention to the Details
Most business owners are "big picture" type of people; they are able to achieve success through a combination of intuition and hard work. And because of that they may feel that a business plan is correct when the numbers, theory, and concepts of it are correct. Unfortunately, details do matter: details show how conscientious the business owner is and how likely they are to let things "slide." Things like typos, issues with graphics, or unprofessional verbiage can easily turn a lender or an investor off.
There are professionals who specialize in business financial management and business planning. It's often worth it to see these planners before you move forward with financing, not after; they will be able to direct you appropriately and get you the resources that you need.