by Sithambaranathan Prithiviraj

Created on: September 23, 2008

Any small business needs start-up financing. However, most small business do have ideas and concepts but they don't do adequate research and documentation and develop a viable business plan. Most small business stop with budgets and sales forecasts. They don't go beyond financial aspects and sales forecasts.

For a viable business plan they must define their objectives,vision in their business plan so that venture capitalists and other investors know what they want to achieve and whether they are feasible.

As well, they must define the target market and demographics in the business plan. It is also necessary they also concentrate on competitor analysis, management structure and organizational issues. This information will show the strengths and weaknesses of the business.

The other common mistake small business do not adequately address is that it concentrates on the needed finance but neglect how it intends to spend that money and the reasons for spending. This is vital in the perspective of investors and venture capitalists because it is important for them to know how the business spend the money and why. This is important for them to evaluate whether the business spends money prudently so that it can be profitable and grow. This information must be included in the business plan so that it covers this vital information.

Another aspect is that the start-up financing small business do not adequately consider legal aspects and licenses and zoning restrictions in the business plan. Any business, which neglects legal aspects will endure substantial costs and will not survive because of legal sanctions and closure of business if licenses are not obtained according legal requirements. That is in the business plan legal aspects must be adequately covered so that it ensures its viability to operate legally.

In a legal sense, it must address environmental regulations applicable to the business as in the current business environment, environmental issues are important for many customer groups and community. As well,it is important for many environmental groups.

In addition, many small business do not update their business plan on a continuous basis. If the business plan is not updated regularly it may not be able to cope with economic changes, competitive pressure and demographic and social changes. In addition, it may not be able to identify unmet customer needs so that it can identify growth opportunities. There fore, any stat-up financing of business must consider updating its business plan so that it is current and feasible business plan.

If a small business address these mistakes comprehensively, then it can avoid failure and ensure survival and growth. As well, it will attract adequate and necessary capital as a start-up business and its viability in the eyes of investors.

Learn more about this author, Sithambaranathan Prithiviraj.
Click here to send this author comments or questions.