10 common business plan mistakes
If you’re planning to start a business you need a good business plan. Not only will it help you to check that you’ve thought of every possible angle or problem and give you a structure to work towards, but it will help you secure vital funding from potential investors.
However, writing a really great business plan isn’t always easy. To help you get started with yours, we look at 10 of the most common mistakes people make when writing a business plan – and help you learn how to avoid making them.
1) Poor writing
A carelessly written business plan that is littered with silly mistakes won’t give a potential investor the best impression. If you can’t check that something as vital as your business plan is properly written, what does that say about the care and attention you will give to your actual business? So before you show your business plan to anyone who matters, check, check and check it again. And if possible, ask someone with great English skills to take a look too.
2) Poor presentation
Your business plan needs to look as impressive as it sounds. That means consistent margins, properly labelled tables, correct page numbers, and consistent font style and size. Don’t mix and match too many fonts or styles, or try to be clever with your layout. Keep your layout clear and easy to follow – so if a potential investor only has minutes to cast their eyes over it they can see the information they need to consider you as a potential investment. If they can’t instantly find it, they may well just move onto the next business plan in their pile. And finally, if you’re printing your business plan out, make sure you use a good quality paper, and send a clean, uncrumpled copy.
3) An incomplete plan
If you’re not an expert writer of business plans it’s a good idea to use a professional, free template and make sure you fill in every section properly using the template’s guidance. If you miss out information your plan will look un-thought out, or unworkable. A busy investor with many businesses vying for funds doesn’t have the time or inclination to try to work out the gaps in your business plan to see whether your idea could work. So make it easy for them to spot the brilliant potential of your idea by giving them all the information they need.
4) A vague plan
Just as you need to make sure your business plan is complete, it has to be concrete. A business plan is not an opportunity to show off your creative writing skills. It’s about conveying factual information as clearly as possible. So be clear and direct. If you can make the same point in five words or five sentences, choose the five words. Overwriting to try to disguise a poor idea or lack of research will be spotted immediately. So be clear about what you want to say, and say it clearly.
5) Too many details
A business investor needs a great, clear overview of your business so they can understand why it’s needed, how it works and spot its potential. What they don’t want to know is exactly how you make your products or the finer details of delivering your services. If you bog your plan down with too many details, you’ll hide the clear, shining potential of your idea and put any potential investors off reading it. If you believe that there are some technical details that are important, include them in your appendix and keep the main part of your plan focussed on the core structure of your business.
6) Unrealistic assumptions
While parts of your business plan will need to rely on carefully considered assumptions (such as your projected forecast), don’t get carried away with making wild predictions of how well your business will succeed, however true you believe they may be. Stick to known facts where possible and, when you do need to make assumptions, include some rationalisation that is fact-based. If part of your plan looks like an over-ambitious dream that is divorced from any proven reality you risk devaluing the rest of your hard work.
7) Not enough research
In order to make well-founded assumptions and rationalise them with strong facts, you need to spend time on research. You need to look for reputable sources that demonstrate the existence and size of your projected market, and list those sources in your plan so investors can check them. Research and pick your facts well. Don’t overwhelm with too many, instead cherry pick those most convincing and reputable and use them.
8) No risk awareness
Every new business comes with risk. If you’re not realistic or aware of the risks that your business faces, it may look as if you haven’t properly researched or considered your idea. That said, a long list of all the things that could go wrong won’t help you either. Instead, pick some of the key risks that your business may face, and suggest solutions you can implement to minimise or mitigate them.
9) No competition awareness
The same goes for your potential competition. Just because you can’t think of a business exactly like yours doesn’t mean there aren’t other ways that your potential customers could (or already do) meet their needs for your products or services. To demonstrate that your business is well-planned and properly thought through, you need to identify your potential competition and your advantages over them.
10) A plan without a plan
A business plan is more than just a collection of ideas about your business. It is a well-researched, concrete plan of how you will start and manage a workable business. A potential investor needs to be able to understand why you are starting it, how you will start it, and where your business is going – and believe it. So make sure you have a clearly communicated vision for your business. Not only will it help you attract any funding you need, but it will ensure your business has the best possible chance of success.