The 3 Most Common Mistakes Every Entrepreneur Makes

Maybe it is because entrepreneurs tend to be optimistic. Maybe it is because entrepreneurs are willing to take risks. Or maybe it is because many entrepreneurs are just plain dumb, but there are some mistakes that almost every entrepreneur will make at one point in their career. These are the three things that you should never say when pitching your company to a potential investor or banker:

No Competition - At one point or another every entrepreneur will say it. "I have no competition." This is typically during the pre-revenue stages of business because once you begin to offer your product or service you will quickly realize that every business has competition. You might be the only one in the world that manufactures your product, but that does not mean you have no competition. Whether you have direct competitors or not you are always competing for dollars with someone or something else. If you have no competition then everyone in the world should buy your product, and if they don't then what is it that is keeping them from purchasing your product? That is your competition. It could be a child's college savings account, a date night with the spouse, or the mortgage payment. These are all competition because they consume dollars that are not available for your product or service.

1% of the Market - The second biggest mistake that almost every entrepreneur will make is believing that capturing 1% of their market is a conservative estimate. Just because 1% sounds like a small number does not mean any joe blow can steal 1% of a market from the competition. Entrepreneurs must have this urge to pretend that they are conservative, when in reality almost every entrepreneur has some bit of optimist in them. Rather than just assuming you can capture 1% market share out of a $100 billion market, you need to build bottom up, data driven projections. Your market potential is defined by your geographic location, your capacity to fulfill sales, and your ability to secure financing to name a few. Take these things into consideration when making claims about your market potential.

Return on Investment - The third biggest mistake that all entrepreneurs make when talking to potential investors is claiming that the investor will make some specific return on their money. For instance, entrepreneurs will come in and say that you can double your money in 2 years with their business model and their projections. Any investor that has been around for any length of time will immediately know that you are ignorant in this subject. As an entrepreneur you don't know what might happen tomorrow let alone 2 years from now. You don't need to convince an investor that they will make any level of return. They understand the game and then know that 9 our of 10 of their investments will fail or only break even, but that 1 single business that hits it big makes all the difference. Spend your time on showing these investors how you are going to hit it big, not how you are a safe investment, because you aren't safe.

These are the 3 mistakes that you must avoid like the plague as an investor seeking angel investment funding or a bank loan.

I am the Founder & CEO of http://www.theexecutiveplan.com, which offers entrepreneurs extensive guides, templates and articles to help create more powerful, effective, and memorable business plan executive summaries.

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