Do you have a working business plan? By that I mean a document that has no business plan mistakes, that guides your decision-making processes and is updated regularly. A carefully crafted business plan (along with the supporting analysis) can make a huge difference in the operational performance of your business.
Maybe you writing a small business plan for your new business. Or revamping an existing document. If you take some time now to read about some of the more common business plan mistakes, you may be able to avoid them.
So Let’s Talk About Some Common Business Plan Mistakes
Not Writing for the Right Audience
Who will be reading your plan? Identifying your audience(s) is critical and you may need to write several versions of your business plan to meet the needs of each stakeholder group that will be reading your plan.
You might need one written specifically for:
- financiers (banks),
- family and friends who are thinking about bankrolling or supporting your business,
- employees,
- partners, and one as
- an operational roadmap for your business.
No Research to Back Up Your Claims
Do the research. I can’t be any clearer than that. A business plan that is based on guesswork – even educated guesswork is not going to all that helpful to you or to anyone else.
Especially if you are looking for a capital injection, if your prospect asks questions about the claims you make in your business plan you need to be able to answer them. If you can’t – it is all over. Do the research, analyze the data and understand what it means, before you put anything down on paper!
Over-estimating the Value of Your Business Idea
Do you have a good business concept? If it is a new idea, or you have developed a new product or an improved method of delivering an existing product to your customers, you need to demonstrate that your assumptions about the demand are reasonable.
This is the very core of your business plan. If you overestimate the value of the product or service in the market, none of your strategies, goals or objectives are likely to be achieved.
No value = no sales = no profit, no matter what your plan says.
All Flash and No Substance
Is your business plan going to be printed on high-quality glossy paper with custom-designed graphics? Have you selected an expensive binding?
Don’t.
You are better off spending the money on obtaining high-quality data on your industry or paying someone to put together your financial data for you. Most of the people who read your business plan are unlikely to be impressed with the presentation if the content is not substantial and designed to answer their questions about your new business.
Having said that, you do need to pay some attention to the presentation. Spelling, grammar, and page layout are all important. You need to make your document as easy to read as possible!
Inconsistent Use of Data (big business plan mistake…)
If you say that you are expecting $100,000 worth of sales in your first year of operation in the section about your sales projections, make sure that number is reflected in your profit and loss forecasts as well. If you are planning to offer credit to your customers make sure that the cash flow projections recognize the cash coming in at the end of the credit period rather than when you make the sale.
These are just two examples of how an inconsistency can occur in your business plan. Inconsistency is a fatal flaw in a business plan. Check and re-check everything to make sure your plan flows and makes sense!
Creative Accounting
Whatever you do, do not get creative with the numbers!
When you are starting a small business the primary reason for writing a small business plan is to use it to seek funding. The people looking at it will have a lot of experience with reading proposals for new businesses. In all probability they will know the industry, not to mention experience with business management. If they are good at what they do, and you need them to be, they will know their stuff when it comes to accounting for business.
They will spot any creativity in your numbers a mile off!
Avoiding these common business plan mistakes
I hope you have found this page of business plan mistakes useful. I hope that this page will help you to avoid as many common business plan mistakes as possible!
