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Top Ten day after curses
The ten “day-after curses”.
It is not enough to simply write a good business plan. In order to meet your targets and raise capital it is vital to plan for the day after investment is received and be prepared for each subsequent stage. Many entrepreneurs, who undergo the intensive business plan writing process with us, ultimately fail after completion of the plan due to the following 10 “day-after curses”:
1. A lack of focus – oftentimes, entrepreneurs “shoot” in several directions at once in the hopes of securing investment. This is not always the best strategy. It is imperative to define a list of preferences you have so as to grade potential investors according to predetermined criteria, such as: are you interested in securing a strategic investor, a financing investment, a passive or active investor, etc. You should only start a broader search for investors if and when you reach a “dead end” and have exhausted all your best possibilities. Apart from that, you should bear in mind that some organizations are more suitable for securing investments than others. For example; you would be unlikely to receive investment from the government subsidized Tabor fund for an internet venture.
2. Immature business – this is a problem that characterizes many Israeli and global ventures. This phenomenon usually comes to light when as entrepreneur considers offering potential investors shares in the business. Cash flow projections indicate that the sum required to repay the investor is, for example, 2 million NIS. The question then arises; how many shares is the investor willing to receive in lieu of 2 million NIS that do not yet exist? The answer to this question will differ depending on the investor and largely depends on the business valuation presented in the business plan. However, even with a valuation many entrepreneurs fall down because they insist on maintaining “control” over their business. This actually translates into offering a maximum of 49% in shares to any potential investors – an impractical and naive attitude that can alienate many.
3. Arrogance – confusion is typical during the early business plan writing stages, however this is often replaced by a sense of euphoria (usually around the same time we swap our “bad cop” act for our “good cop” act). And often, with a business plan is in hand in all its detailed glory, entrepreneurs can become overly confident and even arrogant, acting as though investment has already been secured and all one must do is decide which bank to deposit it in.
4. Being secretive – even if there is no patent or industrial secret included in your plan, there is a good idea at stake and an interesting business model and plan. However, often entrepreneurs become deeply suspicious of others, refusing to let anyone see the plan without signing a confidentiality agreement to “protect” themselves from anyone hearing about their idea or turning up with a similar one. This attitude is ultimately counterproductive and can lead to many doors being closed.
5. Disregarding problems – ignoring those parts of the business plan that are less “strong” (and they always exist). Often the business plan writing process is “closed” even when it is still evident to us and the client that there are chapters and/or data that will need completing in the future. Unless these are completed, the chances for getting a ‘GO’ are limited.
6. Living in a bubble – refusing to deal with changes in relevant factors or operating systems, or listen to the opinions of partners or potential investors, and the general mood in the relevant business environment.
7. Rigidity – every business plan has to be open to modification. Even though part of a good business plan involves laying out a “plan B”, we can never take into consideration all the things that might possibly occur and change on the way.
8. Decompressing– you’ve completed your business plan – but that is only the beginning. Up until now, you have been living in a bubble, but things are about to become more complicated. This is precisely the point when true battle beings, even though writing a business plan is challenging, it was only practice for what is to come – now is not the time to relax!
9. Impatience – friends, this is not going to be an easy mission! It demands patience, composure, stubbornness, determination and endurance. Impatience usually leads to failure. This process can often take a lot longer than you anticipated.
10. Cash flow – you often have to abandon a secure source of income to become an entrepreneur of something that exists only on paper. However, you still need to make a living, you may have children, a mortgage and even young entrepreneurs need money to cope with the period before funds are secured….
In conclusion, this is not an easy mission; however with careful planning and the correct guidance you can make your business plan a reality.