Why your business plan may not work for your business finances
Many business owners are stunned when they find out that they didn't get the business loan they have applied for. It is important to understand that most often the problem lies with the business plan that they have submitted with their business loan application. It cannot be stressed enough that your business plan will be the first impression that a lender has of your business so it is crucial that your business plan reflects your business and you in the best light possible. The bottom line is that no matter how great your product, service, target market, or even market potential is, if your business plan contains or doesn't contain certain things you may not get the capital that you are looking for. It fairly simple-know what to avoid and you will increase your chances of getting the money that you looking for. Here is why your business plan may not work for your business finances-
- You didn't express how your business solves a need-Many potential business owners assume that the lender that they are applying with will totally understand what their business is all about. The reality is that you need to be able to show that your business is the solution for your customers need or want. If you can't show that you have a viable reason for setting up this business then the chances are low that you will get the business loan you are applying for.
- You overinflated the value of your business-However, you should also stay away from overinflating the value of your business. A potential lender or investor will want to see that you have done the right amount of homework and determined what the problem is, how you will solve it, and how much of your market will respond. You will also have to show how you will sell your product or service and stay ahead of your competitors.
- You failed to identify your target market-Some inexperienced business owners think that everyone will want to buy their product or service. The reality is that there will be a certain segment of the market that will be more likely to buy your product or service. These are the people that you will need to identify. You will need to be able show in your business plan that you have not only identified who your target market will be but also the applicable demographics and why they will want to buy your product or service.
- You did not have a marketing plan-Another common error that is made by some business owners is assuming that because their product or service is so great they don't need to market. This is always a mistake. Keep in mind this-How will your customers know to buy from you if they don't know what your business has to offer them or where to find you? Your marketing plan will be the way that you can show your target market what you have to offer them. Your potential lender or investor will want to see that you have thought this out.
- You don't know who your competition is-You should never assume that you don't have competition. No matter how unique your product or service is there will be competition somewhere that can affect your business. Keep in mind that your competition may be more then just the business down the street but can be on the internet, as well. Your business plan should reflect that you have taken the time to determine who your competition is, what they have to offer, and how they market. When you have found this out you can then present to your potential lender or investor what your competitive edge will be.