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Profit Dynamics Venture Capital Survey
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Common Business Plan Mistakes

What is the most common mistake entrepreneurs make when completing their business plan? was asked of venture capitalists.

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Writing a Business Plan for a new venture, or an ongoing business, can be a time consuming task. Software programs or instruction manuals can assist you with preparing a draft of your Plan, but it is still necessary to polish and perfect the document before submitting it to investors or lenders. And there's still the question every entrepreneur asks: Is my plan ready to go? Brian Hill and Dee Power can review your business plan.

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By far the most frequently mentioned mistake was saying that the

company had no competition, or underestimating the strength of competitors (32%). The failure to describe a sustainable competitive advantage was also mentioned by 9%.

Not clearly explaining the opportunity was the next most frequently mentioned mistake, by 27%.

Following that was the related mistake of having a disorganized, unfocused, or even poor presentation (12%).

Miscalculation of market share and market size (9%) were also regarded as frequently seen mistakes, with several respondents saying that they still receive business plans that say, "The total market is $1 billion, if we only get 10% of it, we will be a $100 million company"--without ever explaining how they are going to sell $100 million worth of their product.

Respondents also said they commonly see business plans that do not address the risks of a venture, and contain no contingency plans for coping with the risks (also 9%).

Other less frequently mentioned responses were:

Not explaining how they are going to sell the product

They don't understand the venture capital process, and send the plan to the wrong audience

The overstate management's strengths

They make unrealistic projections

The information is incomplete; sections are missing; the financials are inadequate

They underestimate the amount of capital required and assume the business will develop easily

They refuse to cede control and insist on being CEO

The discussion of management is weak

They assume and Initial Private Offering or IPO can be their exit strategy

They overestimate the value of their enterprise

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