Top 10 Mistakes Made in Business Plans
Lenders and investors may see hundreds of business plans in a single day. Make your business plan stand out against the rest, and avoid these common mistakes.
1. Not proving that you have the management expertise to make it happen. The quality of your people will lend credibility to your ideas and even to your financial projections. If your management team is not as strong as it could be, join forces with a great board of advisors.
2. Not demonstrating where your revenue will come from – what customers pay you and why they pay you. Don’t be too aggressive in setting revenue projections or you will undermine your credibility.
3. Not proving that your business model and long term cost structure is good enough to make a real profit. How will your business make money – what is your margin structure, what are your costs?
4. Not being clear enough in your product description to allow the reader to quickly see the need and the niche for this product. It may seem obvious to you, but not so to the reader not educated in your business.
5. Not proving that the market opportunity is big enough to get interested in. How big is your market now and what will it look like in 5 years?
6. Not adequately acknowledging your competition. Investors know that if there is no perceived competition, there may be no market for what you are offering. The better you can describe your competition, the better you understand your market, and the more likely you will dominate it.
7. Not writing for the target audience. Although the core is the same, the plan should be written for the perspective of banks, equity investors, and others. Go as far as you can to tailor each plan to the audience’s specific interests to show you’ve done your homework and know to whom you are talking.
8. Starting with a boring, unenthusiastic executive summary. This is the first section to be read, and if it isn’t exciting the rest may never be seen. Make it fun and be enthusiastic. It should stand alone and generate interest for more. It deserves all the thought you would put into a professionally done promotional piece for your customers.
9. Poor presentation. If you have typos and grammatical errors in your business plan, the reader will assume the work you do in your business is sloppy too.
10. Saying too much. Keep the entire plan to a maximum of 30 pages, with an executive summary of 3 pages or less. If investors are interested, they will ask for any other information they need. Amateurs talk in the business plan about unimportant details because they don’t know what they should say and what they shouldn’t. Hire a professional editor to reduce the page count and help you emphasize your strengths.
Jan B. King is the former President & CEO of Merritt
Publishing, a top 50 woman-owned and run business in Los
Angeles and the author of Business Plans to Game Plans: A
Practical System for Turning Strategies into Action (John
Wiley & Sons, 2004). She has helped hundreds of businesses
with her book and her ebooks, The Do-It-Yourself Business
Plan Workbook, and The Do-It-Yourself Game Plan Workbook.
See www.janbking.com for more information.