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Dont Invest Too Much Personal Funds

Every
entrepreneur
believes in the business proposal. So some of them just cannot
understand why a business investor
will not want to finance the project.

However, an
entrepreneur
who wants to operate a successful
new business
needs to view the investor’s reports dispassionately and
try and eliminate the mistakes so that the
entrepreneur
has greater chance of getting
business capital
in the future.

Sometimes, an
entrepreneur
will believe in the project so much that he/she decides to
fund the
new business
proposal. However, there is a great risk involved in this.
If the
new business
does not get off the ground and do well, the entrepreneur stands
to lose all personal finances.

However, on the same note, business investors don’t like to invest in projects in
which they find that the entrepreneurs themselves have not invested any money. This
sends a wrong message to investors.

Another mistake that entrepreneurs often make when developing business proposals
is paying them too much. This is one of the worst signals an
entrepreneur
can send investors. Some new business owners calculate the
difference between what they are being paid and what they feel that they are truly
worth as a debt. However, most business investors do not like this approach and
do not feel comfortable in funding a business ventures
that operates under this approach.

One of the biggest mistakes that entrepreneurs make while developing their
business ventures
is not completing estimating their sales potential. This
is a huge mistake. Most investors looking
to invest
capital look at this section of the business proposal most closely.

Some business investors try to fool investors by pulling all their Intellectual
Property into a separate holding company and only licensing the IP to the company
seeking investments.
Venture capitalists
are not fooled by this technique. In fact, entrepreneurs
adopting such a technique are only lowering their chances of
capital access.

Another common mistake that entrepreneurs make is not having a strong management
team. Angel investors place strong emphasis
on the bios of the management team. They like to see who the
new business
has been able to attract.

Finally, another common mistake that entrepreneurs make is not having sufficient
number of investors. Investors are always interested in finding out if other people
are also interested in funding the project. They like to have details of all sources
of seed funding for the company.

Source

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