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Monday, August 28, 2017

Why Did Investors Turn Down My Business Plan?

If you are about to submit a business plan and/or about to face investors to defend the ideas and figures stated in it, then you should read patiently to understand why investors will likely turn down your business plan – this is from experience of others who have failed to convince investors.

I would like to make a simple comparison here with a job applicant who submitted his CV to a prospective employer. Your CV is a document which should sell you as a suitable candidate for employment likewise a business plan to an investor. The principle and strategy you put into wooing an employer in a CV works as well when putting your business plan except that in the former you are seeking employment and the latter you are seeking investment funding.

In this context you are working with the simple principle that a document can summarize your offering and woo an employer (in the case of a CV) or an investor (business plan) provided you can sell them the benefits they are looking to get.

But just because a business plan is designed to sell a business opportunity to an investor doesn’t mean we should exaggerate our claims or falsify figures in order to drive home our point. That would prove to be fatal to attracting funding. 

Institutional Investors or very successful angel investors are oftentimes highly experienced when it comes to assessing a business opportunity and its potentials so it is not advisable to try and woo them with lies and exaggeration. Just hit the nail on the head but make sure you cover the very important details.

This however is easier said than done as many entrepreneurs seeking funding from investors have made mistakes which cost them to lose valuable investments into their businesses. We shall get to see some of the key reasons for this.

Why Investors may turn down your Business Funding Request
Besides the fact that your business may not be viable or not profitable enough, if investors are to assess your business by your business plan, these will likely be the reasons along with several others which time will not permit me to mention.


#1 Your Business Plan was poorly written
If you write a poorly written business plan – one that has grammatical errors, poor layout and disjointed ideas – you are shooting yourself in the foot. The investor doesn’t need a naysayer to ruin your business offer for you. You have given him all the ammunition to turn you down without help from those who don’t wish you and your business well. Learn to write your business plan professionally or contact a professional business plan writer to do it for you.

#2 Presenting a Copied Business Plan
Some people are not aware of this but many investors get many calls from all kinds of people pitching different business ideas. They have read dozens of business plans before and may hire people to read and analyse business plans for them if they don’t have enough time to read it. So imagine what it would feel like to an investor when he reads your business plan and it is very similar to what another person tried to pitch him with say 6 months ago? You have displayed dishonesty, unprofessionalism, inexperience and lack of creativity which are reasons your business offer should not be taken seriously.

#3 You didn’t Answer Important Questions
There are subtle questions an investor wants your business plan to answer without ever asking you and it may not be your fault if you fail to answer these questions yourself if you wrote the business plan (you are not a professional). However experienced, professional business plan writers know the most important questions and answer them as best as possible by stating them at the right places within the business plan so that after reading it, the investor is satisfied albeit with additional questions which provide clarifications. In other words your business plan should not leave grey areas but should provided sufficient information pending when your investor invites you to defend or explain things better.

#4 You Failed to Capture The Main Ideas
There are also ideas that need to be captured under the right segments of your business plan. Some ideas will summarize key business processes, strategies, management hiring and selection process etc, whereas others must describe your financial strategies and plans in a way that already sells the full picture of what your business will do after you gain your desired funding.

#5 Your Business Plan Explains Much, But not How to Succeed
Even if you can explain everything you need to do and who will work with you to achieve it, how will you succeed in achieving your corporate goals and objectives? Most business plans are glorified company profiles, concept notes and business proposals wrapped in a single document. Investors want to know what you will do to succeed in your business and if your business plan can’t capture it, you can be sure they would turn you down.

You can get a professionally written business plan in Nigeria. Give me a call: 0803 206 4106 or email me: paulonwueme@gmail.com

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