Writing a really good business plan is not at all easy since there are various elements that have to be included in it. In many cases it takes a lot of patience, time and numerous revisions until things are right. The problem in many cases is that the business owner is rushing. He/she tries to get funding so the plan is either neglected or does not even get written.
If you want to create a very good business plan, everything starts with avoiding mistakes. The really common ones are presented below.
An Unrealistic Financial Projection
If you take a look at Shark Tank or a similar show, you often see business owners that overvalue their company. These people are often shot down by the investors they talk to.
One of the most common of all business plan mistakes is unrealistic financial projection. Investors and lenders always expect realistic statistics. They want to know the state of the business and where it could end up. When the plan that is presented is optimistic and there are no clear projection explanations, plans are automatically rejected.
Lack Of Target Audience Definition
Business are never going to be appealing to absolutely everyone. A specific target market needs to be defined and you need to present how assumptions are made, together with outlining how businesses are going to target the market.
If you do not know much about target markets and how to define them, stop working on your business plan. You need professional help as soon as possible!
Not Knowing Distribution Channels
You need to have a truly secure business plan that showcases how the product or service is going to be distributed. The business plan has to include absolutely all the possible channels. If this is not present, the potential investor is going to assume that not much research is done. You want to always properly articulate the strategy you have about how the service or the product is going to reach clients.
Adding Way Too Much Information
Similarly to any form of writing out there, if there is too much fluff present, the reader is not going to be interested. Think about you as an investor. Would you be interested in reading a business plan that is 200 pages long?
An investor normally has a mental checklist that includes around 10 points. This is what he/she looks for. All extra is not even analyzed at first.
The business plan’s purpose is to showcase main business elements. Writing needs to be concise and clear. This is appreciated. When there is some extra information that needs to be added, it has to be added to an appendix.
All the research that you add needs to be substantiated and double checked. If you use out of date or incorrect information, the business idea is going to be discredited, just as the rest of the business plan.
Lack Of Competition Focus
There is a pretty good idea that you think your business idea is unique. Many others will think that there is absolutely no business like their own.
All investors and experienced businessmen know that there is always competition. Although the business might be unique, customers have to also exist. If your business did not exist, where would potential customers spend money?
The big problem with the competition side of the business plan is that when there is too much emphasis put on it, investors worry about potential business survival. You need to focus on the niche, the differences that appear when looking at the competition, how the business will complete and what the future holds.
It is so easy to think that the idea you have is the next huge thing but such a claim needs to be backed-up. If you over-hype the idea and you use too many superlatives (greatest, hottest and so on), it is a bad idea. The idea is that you want to surprise investors with research, financial plans and the actual business idea, as opposed to words you believe that someone has to hear.
Not Talking About Weaknesses
One of the worst things that you can do when you write your business plan is to avoid weaknesses. Every single business out there has weaknesses. The mistake is to hide weaknesses or to highlight them way too much. Both of these will put off investors. What you have to do is to address weaknesses and present a good strategy that shows how problems will be solved.
Whenever you highlight various target markets, you have competing strategies or there are conflicting statistics within the business plan, the business investor is going to challenge if business knowledge exists or not.
It is common to have business plans written on completely different days or by completely different people. Then, at the end of the day the business plan is just pasted together. Such an approach can easily lead to inconsistency.
Always take all the time that is needed to review every single business plan section. If inconsistencies are noticed, they have to be solved.
Not Having Others Review The Business Plan
Last but not least, you want to ask people to review the business plan before it is submitted. After being invested so much into your plan, you can so easily avoid grammatical errors, spelling mistakes and more. This is due to the fact that you already know the information in the document. When you have someone else look at the business plan, errors can be identified. The end result will be much more professional and will read correctly.