From Entrepreneur.com:

Bypass some of the most common mistakes made by startup entrepreneurs, and you’ll zero in on a better business plan.

Jessica D. Herrin’s first experience presenting a business plan to investors taught her many lessons, including a hard-knocks course in humility. During the dotcom boom, Herrin’s plan for an online wedding gift registry called for selling products directly to consumers and also through retailers. Herrin, a business school student at the time, lacked wedding industry experience, so she didn’t know retailers would never support a startup that competed with them. “When we presented the plan, people looked at us like we were crazy,” Herrin recalls.

But the 34-year-old Burlingame, California, entrepreneur turned out to be crazy like a fox. She revamped the plan to employ a retailer-only distribution system and eventually got funding for her gift business. And before she even began to solicit investors for her latest business, a custom jewelry maker, she spent time with a retailer partner who showed her the industry ropes. As a result, Herrin was able to quickly raise the $350,000 in seed money Luxe Jewels needed to get off the ground in 2004. Today, Luxe has $1.2 million in sales, 10 employees and a CEO with a strong appreciation for the power of avoiding deal-breaking mistakes in a business plan.

Business plan experts, venture capitalists and entrepreneurs say Herrin’s experience is common. Many business plans sport fatal errors that virtually guarantee a hostile reception from lenders or anyone else who views them. Unwary entrepreneurs plant red flags throughout their plans, from the executive summary to the financial statements, says Linda Pinson, a Tustin, California, business planner and author of Anatomy of a Business Plan. But the most common mistake, Pinson says, is a broad lack of internal consistency. An entrepreneur will, for instance, describe marketing costs one way in the section on marketing, then give another figure for marketing costs in the financial statement. “That’s the kiss of death,” Pinson says. “If [the business plan] doesn’t work, how is the home business going to work?”

Full Article Here

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This entry was posted on Friday, March 9th, 2007 at 1:04 pm and is filed under Work at Home, Home Based Business, Home Business, Grow a Home Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.