1. Don’t write a business plan
By going through the process of writing your business plan you will have thought through all of the issues that an investor considers when judging the viability of your business. Even if they don't look at your entire business plan on the first pass you'll be prepared to discuss and inform regarding the important issues.

Business plan software can walk you through the plan creation process step by step breaking it down into manageable segments. It also helps you understand what to write and why it is important to your plan. The automatic generation of cash flow, balance sheet, and ratios is also a big help. What you need to look for is software that allows you to customize the plan to your specific needs.

The Executive Summary should contain the following:

• The primary objectives of your company.
• Your key personnel.
• The market you will be addressing, their need, how the need is currently being met, and how you will meet this need more effectively.
• A description of your product or service.
• Financial projections for five years, profit point, break-even point, and ROI for investors.

Our software, PlanWrite Business Plan Writer Deluxe, is a tremendous help in this process.

2. Be inflexible to a change in your business model
As you begin to implement your business plan you will find that the real world may not embrace your business model. Discover what works and doesn’t work and be willing to alter your plans accordingly. You may even find greater market potential that requires you to re-think your entire business plan.

3. Don’t consider how your product will be distributed
Failing to understand how your product will be distributed is a sure way to turn the investors away. Do your homework on the various distribution channels to know their expectations and working model. Find the channel that works with your pricing model and will facilitate your growth requirements. If possible, develop partners with brand names that will provide credibility and growth potential.

4. Make it clear to investors that you will maintain complete control of the business
Focusing on retaining control of your company rather than building the business is not attractive to investors. They need to see that you are willing to assume some level of risk and not intent on hoarding stock. Great businesses have been built by entrepreneurs that understood their limitations and hired executives who knew more than they did.

5. Don’t put together a strong management team
A business plan is only as good as the executives who will be responsible for making the business succeed. Be sure to determine who will run the business and identify their achievements and ability to make the business a success. Get commitments from qualified personnel for operations, financial management, development, marketing and sales.

6. Assume people will buy your product just because it’s “cool”
There must be a need and desire for your product. No longer will a clever idea, by itself, bring in the money. You need potential customers willing to test your product and, at some point, paying customers who validate your pricing strategy.

7. Project Unreasonable Near-term Revenues/Profits
The biggest red flag to an investor is revenue projections that increase by the same percent each year. You should anticipate various increase levels as your business progresses through different stages of growth. Your engineering, sales and marketing expenses will also change with these growth stages. Research businesses in your industry to determine expected ratios for expenses and revenue per employee. Investors will take you seriously when they see that you have a clear understanding of the financial implications.

8. Ignore the Investor's Requirement for an Exit Strategy
Understand what motivates an investor, their expectations, exit strategy, and required ROI. Remember the investor has many alternative investment opportunities. If they are going to take a risk on your concept they have to "BELIEVE". Demonstrate your potential for profitability with thorough descriptions of the market, your personnel and your product concept.

9. Assume there’s no competition
Customers always have a choice. They can either choose to do things the way they have always done them, find alternative solutions, or purchase your product. You need to know who your competitors are as well as their strengths, weaknesses and emerging technologies. Without this knowledge you will have no ability to create barriers to entry or plan for their retaliation. If you can’t identify competition you may not have a market.

10. Misrepresent Your Market
When you haven’t done your market research it’s obvious to the investor. First find your market niche then determine its TAM (Total Available Market) and the SAM (Served Available Market). Through the use of surveys and other research tools you then need to calculate what percentage of the SAM you will penetrate and how much you can increase the SAM. Stating that you will capture the entire TAM is a clear indicator that you don’t understand the market and your true potential.

11. Overlook legal requirements for incorporation, patents, trademarks, etc.
In some industries (i.e. pharmaceuticals) it is critical that competition be dissuaded through the use of patents, as patents protect the research and development investments of the company and provide a window of opportunity to realize a share of revenues before competitor offerings arrive in the marketplace. Trademarks, copyrights, non-disclosure agreements, employee agreements, etc. are a necessary part of the protection of a company’s intellectual assets and branding. Incorporation will help to protect the investors and company assets in the event of legal proceedings against your company.

12. Fail to understand the method(s) & cost(s) of getting your sales message to the marketplace
Investors want to know: what methods will be employed to attain customers; what your customer acquisition costs are; what the average and target revenues per customer are; how many customers are required to break even and the length of the product sales cycle. They also want to see your future plans for retaining existing customers, as this is a critical component to a successful venture.