Whilst getting your funding in place and launching your business, you may tend to neglect and overlook common mistakes in your business plan.
A business plan full of mistakes and inconsistencies will take you one step closer to failure. It may be the reason why you haven’t heard back from the people you’ve sent it to.
The idea is to avoid certain deadly mistakes that can occur while writing a business plan. Avoiding common mistakes can help improve the chance of a great first impression.
Below are some of the common mistakes you should be avoid before sending out your business plan.
1. Information Overload
If you were an investor, would you want to read a 200 page business plan? No!
Most investors get easily bored and the last thing they want to do is wade through pages and pages of tedious and often boring narrative.
Investors have a mental checklist of key points that they are looking for in the plan, everything else is unnecessary. The purpose of your plan is not to impress the reader with how much you know. Focus on the what will make them decide to invest in your project.
Be clear and concise and if you have additional information which you would like to include in the document, create an appendix.
2. Not defining the target audience
No business will appeal to everyone. You must define your specific target market, present how you have made these assumptions and outline how you will specifically target this market. Conducting proper market research should help to know your target market.
3. Unrealistic financial projections
Lenders and investors expect you to show a realistic picture of your business as at now and where it hopes to be in the future. It will be a major mistake to be overly optimistic with no explanation of your projections.
If your projected numbers look “too good to be true” and without an explanation to support the projections, the reader disbelieves them and moves on, and you will probably not be in the room to defend your plan.
Projections can also be presented with a summary scenario analysis that indicates base, worse and best case scenario.
4. Underestimating your competition
Even if you think you have a ‘unique’ business idea and are sure that no other business like yours exists, think again.
There is no such thing as no competition. Any other existing alternatives through which people solve the problem your business is tackling is a competition.
Equally if you highlight your competition too much the investor will worry that the business will not survive. Focus on what differentiates you from the existing alternatives and how you plan to leverage on this to gain significant market share.
5. Not analysing the risks of your business
Every business has potential threats and risks. Some are obvious, and you need to address them upfront. Some are not, and you need to highlight them in your plan. Analysing the potential risks to your business, including detailed strategy of how you plan address them, will demonstrate your worth as an entrepreneur that is prepared for the long ride.
So what market forces are there that could prevent your plan from being successful in the future?
6. Not knowing your distribution channels
Producing goods or service is one thing and getting it to the right customer is another thing.
It is important to demonstrate how you intend to get your products into the hands of potential users. It will also be helpful if you could indicate why you think the chosen channels will give you the best ROI.
Avoid channel dumping in which you highlight all potential marketing options without specifically stating the viability of each channel.
7. Using an outdated Information
Most elements of your business plan information will relate to researched information and forecast. This includes market demand, key economic indicators, competitive environment etc. You cannot present a business plan prepared in 2008 to investors in 2016.
If you are using data, make sure they are from a reputable source. Not everything you read on wikipedia is true. By using incorrect or out of date information you will discredit your business idea and the remainder of the plan.
You may believe your business idea is the next big thing but you need to be able to back up your claim. Over-hyping your business idea and littering your plan with superlatives like “hottest” and “greatest” does not validate your business.
Convince your reader with the strength of your business idea, product and execution strategy and not with statements that makes you sound like a ‘wantepreneur’.
9. Being inconsistent
Another business plan mistake is inconsistency in the document. This happens when your target markets, strategies, distribution channels and financials are not aligned.
Highlighting irrelevant target markets, quoting conflicting statistics or having competing strategies within a plan will put a doubt on your ability to execute against the market you are targeting.
Sections of plans written on different days or by different people and then pasted together into one document may increase inconsistencies. Take your time to review each section of your business plan and ensure they are not conflicting.
10. Too many grammatical errors and poor presentation
Don’t let bad grammar stand between your business and the investment it needs. Ask others to proofread your plan before submitting it. Use tools such as Grammarly to highlight common typos and errors.
Your business plan also 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. Also avoid too many technical jargons.
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.