Top 10 mistakes entrepreneurs make when writing a business plan.
Writing a Business Plan isn’t rocket science, but it isn’t a walk in the park either.
Using an outdated approach
One of the biggest mistakes is presenting a plan that’s boring and out of date. In the late ’80s, most business plans were short, bullet-point charts focused on projected sales. Today, CD-Rom and DVD presentations are becoming the industry standard.
Lacking adequate preparation
Most people know what they want the business to look like, but have difficulty getting it on paper in a thorough manner. Areas often found lacking include the management team’s experience, a concise executive summary, and a clear description of how the deal will be structured.
Leaving out key information
It’s easy to miss financing opportunities by not including such details as a thorough market analysis, the sales volumes necessary to meet projections, an industry trends analysis, or a thorough accounting for what’s happening within competing companies. Because of these intricacies, it is often best to use a team to help write the plan.
A well-designed logo on the cover and the header say you have turned an eye towards your business’s future branding. A simple design element such as having the colors in your charts match those in your logo shows an attention to detail generally unseen in the start-up phase.
Overdoing the market analysis
When you’re pitching your plan, you’ll need to trust that at some level they get it. For instance, if you’re creating software that will solve a problem with virtually every computer, there’s no need to write pages about how many people are using computers.
Once you have the reader enamored of your market, don’t forget to focus on how you intend to get that big market. Just being “better” isn’t going to cut it. You must have a solid strategy, describing the underlying magic that will make the product fly off the shelves.
Not having a qualified management team
A big mistake is not being able to answer who is going to fill positions in which the CEO has no experience. Best case is that you have an important position filled with Superstar X; worst case is that you identify it as a weakness, and express your plans to recruit an all-star.
Having static, incomplete financials
While financial statements obviously are required, a better use of a reader’s time is the per unit economic assumptions. Quickly demonstrating what “sales” means in terms of cost of goods sold, labor and profit is much more meaningful than some pie-in-the-sky five-year pro formats that just show net income.
Not telling the story well
It’s a pitch, so make it read like one. Don’t make it too rah rah with fluff language. Your plan should demonstrate a bright future with contingencies for darker days. Make it exciting and realistic, and make the reader want to be involved.
Ignoring the little things
Typos, irregular font size and use, poorly formatted graphs, and unused headers will reflect poorly on the content of the plan. A detail-oriented, attractive plan will get the final 5% points the others don’t.