9/30/15

 

Why do business plans fail?

 

A successful business plan is one that is able to attract investors and funding. It is used by entrepreneurs as a guide for the company and shows investors what the business is about, a market analysis for the product or service you will be providing, who are the competitors, how will you market your product, how will the business be managed, how much funding is necessary and what are the business’ financial projections in different time periods. There are many reasons why a business plan can fail. I think the most common mistake is that entrepreneurs do not set realistic values in their plans. Entrepreneurs should take ample time to study the market and know how their product or service will be received in the market. Business plans need to have specific information about their target audience, they can use primary or secondary market research although secondary is the most cost effective and most common. The text states that another common mistake is the lack to mention how the investors will be repaid with a return/interest. Investors want to be sure their money will be put to work and not only there to make the dreams of an entrepreneur a reality but they want to get richer too. The investors need to feel they can trust in the company therefore all the information in the business plan must be real and honest, even the resumes used must be of real potential employees that are qualified for the positions. Business plans that are not specific, relevant, honest, and valuable will most likely fail.