Why Aren't Business Plans Funded?

[Ganibade]

Failure is guaranteed if a man does not understand and apply the success formula correctly. I say this without reservation, and I speak from personal experience. You can be certain that there is a formula for success in all of life's endeavors, and ignorance of the law is not an excuse. The fact that some of us are wise in areas where we succeed and foolish in areas where we fail demonstrates that we all have something to offer each other. When it comes to raising and securing funding, the same principle applies.
If you do not know what the secrets are to successfully raising finance, you will need to hire an expert to help you learn and master the techniques in order to have a well-rounded knowledge for future success. One thing is certain: you do not want to become like the masses who are unconsciously incompetent in this subject, frequently approaching banks and investors with ill-prepared business plans only to fail. In this article, I will give you an insight into the world of writing an effective business plan for funding in order to help you raise funds successfully and quickly. Your company must be 'Investment Ready' in order to successfully raise funds.

The following are the top five reasons why a business plan will be rejected for funding:

1. The marketing strategy demonstrates that the company lacks a competitive edge in its industry or that the company lacks a robust marketing strategy and is likely to fail.

2. The management team is insufficient and, in some cases, lacks the necessary competencies for business success.

3. The business strategy is ambiguous, putting the funder's capital at risk.

4. Financial projections are based on overly optimistic assumptions that, when tested, show that the business will fail if the most likely market outcomes occur.

If your company does not have a plan in place to address all of the aforementioned issues, you will almost certainly fail in your attempt to raise funds. The reason is straightforward: the business plan is a management tool that funders use to conduct due diligence on businesses that require their hard-earned money. Funders use a variety of tools to assess the viability of a business for funding, and unfortunately, many small businesses are unaware of these evaluation techniques for funding decisions. As a result, many businesses are not investment ready when they approach a funder, and they are surprised that their time and money spent developing the business plan was wasted.

 

[Yusra3]

Here are some primary reasons business plans cannot get the fund they wish from financial institutions like bank, investors, etc. Perfection of the business plan will be then checked by errors in financial projections, absence of sufficient market opportunity, not being able to successfully inform about the company's competitive advantages, ineffective presentation style, or weak qualifications of the founder(s) as opposed to the competing startup. Moreover, there are other things beyond entrepreneurs' command such as poor timing of the economy or non-aligned agendas that will not only affect the capacity to get financing for well structured business plans but also at any time.

 

[Leah Kelvin]

Various issues may result to business plans not being funded. These are the reasons why business plans are not funded:

1. Non-viability: It is possible that a business plan may be found out to be non-viable by investors or lenders hence denying it funding. In case its financials, market opportunity and/or the idea are not convincing or realistic to many, it will end up deterring potential funders.

2. Weak value proposition: The proposed start-up’s unique value proposition must be fully and clearly explained within a business plan. Investors can therefore avoid funding such a proposal if it either fails to differentiate itself from others competing in similar markets or lacks strong motives for customers’ buying decisions.

3. Insufficient market research: For instance, a good investor always wants an entrepreneur to have conducted some extensive market research which demonstrates an understanding of his/her target markets’ size, nature and scope. This kind of plan would fail to attract any funds if comprehensive market research is missing or industry trends are left out

 

[Suba]

If you want to raise funds for your business, whether from investors, banks or other parties, you must be able to prove good business performance with various fundamental analyzes of the business. such as complete and accurate financial reports that have been audited by a public accountant if necessary, what is the purpose of raising funds, if your aim is to pay off debt then there will be no institution that will provide a loan for your business. You also have to explain the business plan starting from business goals, operational plans, etc.