It is no secret that a business plan is inevitable when one is starting or running their business professionally. There are several types of business plans and there so many formats to choose from. Just a quick search online can give you access to countless pre-written business plans that you can just edit.
Most people are so hung up on just having a business plan that they forget that there are fundamentals that must be adhered to. Such an approach, amongst several others, usually leads to numerous mistakes when working on or coming up with business plans. As a result, many startups fail to get funding because of avoidable mistakes.
In this article, we discuss some of the common business plan mistakes.
1. The Use Of Poor English in the Business Plan
Not everyone is endowed with the best written English skills – that is a given. However, it is not expected for a business plan to be riddled with poor grammar, incorrect spellings and the like. Often times it is very common for people to write off things that are presented using poor English.
People tend to regard those things as shoddy or indicative of no seriousness. You must get this one thing, yes a business plan is not necessarily about doing an English assignment per se. Be that as it may, it is still in your best interest to present your business plan using the best possible English.
You can even have English gurus go through your business plan before you submit it. Your business plan might be the first impressions of your business to potential investors so present it the best way possible. Many people overlook this and it can be a somewhat tiny but costly mistake.
One of the biggest mistakes that people make is to have contradictions in their business plans. A business plan is comprised of several sections that might be separate but connected at the same time.
There must be coherence and a seamless flow from one section to another. For instance, you can find the sales and marketing plan not tallying with the financial projections. These inconsistencies tend to happen for a number of reasons. One of the top ones is that people are lazy to diligently draft business plans.
Thus they just find already done business plans and edit them to being their own. Given the fact that some people will not be fully aware of the thinking process applied in those source documents, they can overlook certain things.
The moment an investor notices that there are inconsistencies they might question your integrity and that will dent any prospects of getting funding.
3. Unreasonable Length
By this, we mean either of two things. One, your business plan can be too short to the extent that it does not even cover the essentials. Two, it can be too long to the extent that a potential investor might be put off by the length.
For the second scenario, it is also possible that you would have included a lot of unnecessary details. As much as investors vary in terms of approaches, they have certain elements that they look for in business plans.
Examples of such elements are unique value proposition, target markets(s), sales and marketing plan, financial projections, and supply chain management, just to mention a few.
Another thing to note when writing your business plan is to be clear and succinct. Do not be too wordy or verbose – just be short and straight to the point. Some people think that a voluminous business plan is a sign of a well-written business plan; that is not necessarily so!
Most prospective investors have busy schedules and want something they can scan through and quickly get the details they need to decide. The working principle should be – be short enough to attract attention and long enough to cover the essentials.
4. Unclear Value Proposition in the Business Plan
As stated by startupbizglobal.com, business plans without a clear value proposition don’t get funded. This is one of the biggest things that potential investors look out for in business plans.
Investors want to bankroll a business that shows that it has a unique value proposition. If your business plan does not adequately demonstrate this element then your business plan will not achieve its intended purpose.
This element is also closely tied into things like the target market and how you will deal with competition. Most people just draft a business plan without paying close attention to making it clear, on paper, that their business offers a unique value proposition.
5. Poor Business Plan Financials
If ever there is an area that prospective investors look at intently is the financials. We are talking about things like cash flow projections e.g. for 1 year, 2 years and 3 years respectively.
The financials are what demonstrate how your business will fare with respect to generating income and bringing about profits. It is no secret that any investor wants to fund a business that will have significant returns on investment. If your financials are incorrect, unrealistic, or unclear then you are most likely to not get the funding you need.
It is important to note that at times you might get the projections right. However, despite getting the financial projections right, you will still fail to impress potential investors. At times potential investors like to look at the versatility of your projections and how you plan to adapt in case you do not meet the set projections.
A business coach who will analyze your financial plans and provide insight. Industry experts from Lisnic can provide detailed guides on how you can improve your plans and actually achieve them. Furthermore, if you have an intrapreneur go through your business financial plans, then they can bring advice from other companies that have actually worked.
6. Being Overly Superlative
It is very common for people to compensate for their inadequacies by being overly superlative. For instance, you might find some using adjectives such as finest, greatest, hottest, and so on.
An example would be, “This business idea is the finest thing to ever hit the market. The strategies we shall use will be the hottest and greatest approaches a business can ever use.” By so doing you are just being superlative without necessarily providing empirical evidence. Let your detailing of the business idea and the rollout plan e.g. sales and marketing plan be clearly indicative of how awesome your business idea is. You do not need to try and demonstrate that by using superlatives.
The use of superlatives can be taken as a vain attempt to cover up for the lack of demonstrable potency of your business idea.
These are 6 of some of the common business plan mistakes that people make. The good news is that they can be easily worked on and avoided. Take your time to come up with the best business plan.