Projecting outrageous Profits
Most of the entrepreneurs while making a business plan try to manipulate yearly profits by some percentage. By showing higher profits indicates that the owner is underestimating business expenses and costs. It shows the business owner chooses profits overgrowth. The best business-minded person invests in the market for higher growth from leftover money after cost and expenses.
Every startup should try to avoid this and find out real figures by researching how reputed companies make profits. Try to estimate your own. Find out our marketing expenses and whether lower than average?
Incomplete Financial Projections
Every startup should show the true picture of the cash flow statement, Profit and loss account, balance sheet, and other accounts. It is a good choice to use charts to show data along with details. It is not enough just to show profits and sales but startups should show the required investment and plans.
Never say you will capture a small proportion of a big market. Start with basic assumptions and start doing sales forecasts. It is true that forecasting sales are not as easy. Due to environmental factors market changes rapidly so it’s better to forecast on a realistic basis based on past transactions and keeping in mind the current market scenario.
Inflating the market
The worst Mistakes by Startups include talking about the market in percentage, using realistic figures. Never speak about the numbers, always speak about the market and let the investors think about how big it is.
Too “big Picture”
Startups mostly deal with global strategies and show the big picture. A startup should illustrate the economy of single product production, to channels, to end-users. Always show the cost of the product, what buyers have to pay, what is the profit margin, how you’re gonna scale up your business, your distribution channel, how you will attract web traffic, and how long your production process and other things will take.
Unrealistic about selling channels
Other big Mistakes by Startups are including not understanding channels of distribution. Most startups assume retailers will buy products directly from him but it is not true often they go through distributors. If you’re thinking that half will be your profit margin then you do not understand the distribution channel. You have the need to go through the calculation of profit margin, cost of the product, and other administrative and distribution costs.
Communicate your startup plan to investors in brief. Always remember pitching your idea plays a vital role. More confidently you pitch the idea to the investor more interested he or she would be. Try to explain each and every point clearly in plain language, not in a complex. Try to prove your points realistic with the help of statistical data and charts.