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Common Mistakes – How to Write a Business Plan : Part 7 of 8
COMMON BUSINESS PLAN MISTAKES
Even with all of the information provided in the first six parts of this post series, there are still mistakes to be made on a Business Plan. No one is perfect and your Business Plan won’t turn out perfect on the first draft either (and probably not the second or third). However, there are some common mistakes to keep in mind when writing and reviewing your Business Plan that will at least aid in attaining perfection.
Failure to be Clear and Concise
The most common mistake when preparing any document is a failure to convey what you want to the reader. There are two main elements that can contribute to this error.
1. Avoid Grammatical and Mathematical Errors
While many minor errors here and there are common and are often overlooked in everyday documents (such as my blog posts), such errors will detract a lot from your Business Plan. Consider hiring a professional editor to review and revise your plan once it is drafted. The fewer errors in your sentence structure and calculations, the easier your Business Plan will be to read. The easier it is to read, the more impressed potential investors/lenders will be.
2. Simplify the Style/Format
There is little need to break out the thesaurus when preparing a Business Plan. Keep things simple — don’t overdo everything with the hope of impressing potential investors/lenders even more. While you don’t want to write using modern day slang terms, you can be still professional and impressive without being a genius.
The format of your Business Plan should remain simple as well. As I suggested before, use ever possible means to make your Business Plan easy to read, such as a table of contents and tabbed and labeled sections. Each section of your business plan should be in outline format, with bullet points, roman numerals, etc. This, again, makes for a smoother read.
Failure to Utilize the Input of Your Team
While you own the company and likely have the most information, your management team, Board of Directors and fellow owners should have some input in the Business Plan too. For example, your mission statement (contained within the Appendix) should be a joint effort.
Part of the preparation of your Business Plan should be various meetings with your team to discuss your financials, research, the organizational structure of your company, etc. Not only will this help to make your Business Plan more concise, but it will help your business overall by invoking communication and participation from everyone.
Overestimating Financial Projections
There is a temptation when preparing your financial projections, to splash a little excess on the numbers, so to speak, with the hope of impressing potential investors/lenders more. You may think that, the more money you show that your business will make down the road, the more likely they are to provide funds. Doing so, however, runs a huge risk because you could be very wrong.
Instead, be conservative on your financial projections. Rather than over-speculating, you may want to consider under-speculating a little. Keep in mind that, should you overestimate and end up making less money than projected, in not only puts your business in a bind, but ruins your credibility. But, if you underestimate and end up making more money than planned, this can do nothing but make your investors happy and aid in future expeditions for funds.
In no way, shape or form should you skimp on the research put into your Business Plan. Your research needs to be thorough and complete before you even start putting a Business Plan together. The two most common areas in which business owners miss the mark on research are: the competition and the target market.
Don’t overlook or avoid your competition. You need to know what their strengths and weaknesses are and how they help or hinder the success of your business. And you need to have data to back that up, otherwise the information is useless.
And, as far as your target market goes, you need to do more than just assume who they are. Find data that shows that they target market you are focusing on actually uses (or has a need for) the product or service you provide. Do so through market testing. All too often business owners think they can get away with skipping the market tests, but that is not the case. Investors and lenders want actual data that shows your product will succeed and market tests are the best source for that data.
Keep in mind that your Business Plan can make or break you. I know that’s pretty harsh and straight forward, but it’s the truth. This is not something that can be completed overnight, in a week or even in a month (unless you spend every waking hour working on it). It will take a lot of time and work — and expectedly, some frustration. But if you make the extra effort to be sure your Business Plan is the best it can be, you’re sure to find success.
Business Plan – Part 1: Overview
Business Plan – Part 2: Market Analysis
Business Plan – Part 3: Define Organizational Structure & Management
Business Plan – Part 4: Define Strategies, Service & Product Line
Business Plan – Part 5: Funding Request & Financial Information
Business Plan – Part 6: Executive Summary, Table of Contents and Appendix
Business Plan – Part 7: Common Business Plan Mistakes
Business Plan – Part 8: Obtaining a Business Loan
Related Small Business Buzz Posts:
Overview – How to Write a Business Plan : Part 1 of 8
Executive Summary, Table of Contents and Appendix – How to Write a Business Plan : Part 6 of 8
Funding Request & Financial Information – How to Write a Business Plan : Part 5 of 8
Market Analysis – How to Write a Business Plan : Part 2 of 8
Define Organizational Structure & Management – How to Write a Business Plan : Part 3 of 8