In showing you the six biggest mistakes to avoid in your business plan, it’s helpful to start with the goal of your plan. In general, this goal is to get someone else to say “yes.”
That someone may be an investor or lender who you want to write you a check. It might be an employee you want to join your company. It might be a firm with which you want to partner. In any case, you want them to say “yes” to your plan.
Thinking about it this way, you will realize that your business plan is essentially a marketing document. Its goal is to market your business to the reader and get them to say “yes.” Anything that could dissuade them from saying “yes” is thus a mistake.
Below I will cover the most common mistakes.
1. Typos and Bad Grammar
The first mistake to avoid in your business plan are typos and bad grammar. Consider the following statement/question a prominent venture capitalist once asked me: “If this entrepreneur can’t even put together a well-written business plan, then how could they possibly run a successful venture?”
So, make sure your business plan doesn’t have typos and that it’s well-written. Likewise, make sure it visually looks nice. No one wants to read pages and pages of unformatted text.
2. Too Much Information
The second mistake to avoid is having your business plan be a ‘data dump.’
An example of a ‘data dump’ is adding tons of information to your business plan that is neither enticing nor easy to read. Your business plan can’t just be a bunch of information about your business. No one wants to read that. Remember, your business plan is a marketing document that markets your business to investors, lenders and/or other readers.
So, instead of, for example, providing four pages of industry research with loads of statistics, include two succinct pages of research that offer select statistics. And most importantly, focus on why these statistics support the success of your business.
Each piece of data included in your business plan should support why your business is a good opportunity for the reader.
3. Mentioning Past Achievements
The third most common mistake in your business plan is failing to discuss what your business has already accomplished.
The best indicator of future success is past success. As such, if you’re able to show that in the last months or years your business has already accomplished specific tasks and/or milestones, this helps prove you’ll be successful in the future.
So, be sure to highlight all key accomplishments your company has achieved to date.
4. Exaggerating Your Market
The fourth key mistake to avoid in your business plan is to overstate the size of your market.
Rather, get as specific as possible as to the size of your relevant or specific market.
Let’s use the healthcare market as an example. If someone says they’re competing in the $1 trillion healthcare market, that is clearly not a relevant market. Even if they say they’re competing in the multibillion-dollar medical device market, a sub-segment of the healthcare market, they are still not being targeted or relevant enough.
You must continue to pare down your market to get the relevant market, such as the stent segment of the medical device market. Then, as well as you can, determine the size of that relevant market.
5. Not Focusing on Your Customers
The fifth biggest mistake to avoid in your business plan is not focusing on customer needs.
At the end of the day, your business will succeed or fail based on whether or not you satisfy customer needs. Your customers, with their checkbooks, ultimately determine whether your business prospers or fails. So spend time focusing on who your customers are, what their needs are, and proving that what you’re offering really caters to these needs.
6. Unrealistic Financials
The sixth and final mistake to avoid in your business plan is showing outrageous or outlandish financial assumptions.
Rather, your financial assumptions in your business plan and specifically your financial model must be more realistic. For instance, if you say you expect $1 billion in revenue in your first year of operations, you will turn off any sophisticated investor.
That’s because no company in the history of the world has ever achieved such revenues so quickly. While your business may be unlike any other, you should still research other companies to understand the most likely growth scenarios such as how fast your revenues can grow, how quickly you can hire and train employees, and so on.
Most entrepreneurs haven’t created scores of business plans. Nor have most presented their business plans to experts who provided feedback. As a result, most business plans, unfortunately, exhibit one or more of the mistakes detailed above. Now that you know about them, yours won’t.
Business Plan Mistakes Infographic
Below is an infographic of this article for quick reference.
In addition to business PLAN mistakes, there are many business mistakes to avoid. We put together the slide presentation below to show you “20 Business Mistakes to Learn From.”