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.”
Your business plan should be as long as is required to convince the reader that your business plan is worth investing in or taking an interest in.
That being said, the average length of a business plan to accomplish that goal is 15 to 25 pages.
The Ultimate Mission of Your Business Plan
Importantly, to determine the ideal length of your plan, remember the ultimate mission of your plan. That mission is to convince the reader to get involved in and or fund your business. If your business plan is too short, you’re probably not giving them enough information on your business. Conversely, if it’s too long, you’re providing too much information and you’re going to bore them, with the result being that they’ll lose interest.
Because length matters, the most important part of your business plan is clearly the first page or pages of your business plan. The first page is usually the cover page, followed by the table of contents. And then, the first real page of content is your Executive Summary. This is why the Executive Summary is so important. Because if you don’t capture the interest of the reader here, on these first pages, they’re just not going to read on.
In particularly, the very first paragraph of the Executive Summary is of critical importance because if you don’t excite somebody right away, they are not going to keep reading.
I typically want the Executive Summary to be one to two pages to get the reader interested in your business. Then, the rest of your plan supports the Executive Summary and goes into more detail about what your business is about, what products and or services you will offer, what is your marketing plan, what are the highlights of your financial plan, etc.
After the Executive Summary, there are 9 other key sections of your business plan. Each of these sections should be one to two pages each. And so, if we take an average of 1.5 pages per section times 10 sections (including the Executive Summary), we now have our 15-page business plan.
Importantly, the final section of your plan is your Appendix. Your Appendix could be longer than other sections because here you’ll include your full financial statements — your income statement, balance sheet, and cash flow statement – and any other supporting documentation. But once again, the core of your business plan should be only 15 to 25 pages, or whatever amount of text and or pages is required to convince the reader that this is an opportunity worth pursuing.
Your Plan Supports Your Executive Summary
Let’s revisit your Executive Summary since it’s so important to the success of your plan. Importantly, in your Executive Summary, you must convey why your business is exciting and why it’s going to be successful.
Then, the rest of the document, that is, in the rest of your business plan, you will support this. For example, you might say in the Executive Summary that “our business is poised for success because we are competing in this market. This market currently enjoys sales of $845 million per year and is growing at a rate of 9% per year.”
This is enough research to include in the Executive Summary to get the reader or investor interested. Then, in the body of your plan, particularly in the Industry Analysis section, you must include whatever supporting information to prove this fact and go into more depth.
Specifically, in the Industry Analysis section, you would not only repeat that “the market size is $845 million and is growing by 9% per year” but you’ll cite different sources proving these figures. You’ll discuss different segments of the market. You’ll mention different geographic regions of the market, and so on. In summary, in the Industry Analysis section of your plan, you’ll go into as much detail as is required to further prove that the market opportunity is sound.
Likewise, in your Marketing section, you’ll go into as much detail as is required to prove your marketing plan is sound. For example, if one of your promotional strategies is PR or public relations, you’ll detail what specific newspapers, magazines, and websites you will target backed up by research on the customer demographics of those media sources. You’ll also discuss your PR strategy, such as whether you’re going to hold events or create stories.
Nobody’s Going to Read a 100 Page Business Plan
A final and important point on the ideal length of your business plan is that you want to make sure to include enough information to answer the reader’s most important questions, but not every question.
If you answer every question, your plan will be too long and you will bore most readers. Remember, nobody’s going to read a 100-page business plan. Rather, include the critical, concise information upfront in your Executive Summary and then, in the other sections of your plan, provide enough information to prove what you’ve said in the Executive Summary, add additional detail, and answer core questions that investors or readers will have when reading your plan.
Business Plan Length Infographic
Below is an infographic of this article for quick reference.
We put together the slide presentation below entitled “How Your Business Plan Should Look” to give you additional pointers on creating a great business plan. These pointers allow you to keep your business plan short in length, but still very impactful.
There are 7 core strategies I use most. These are the same strategies I’ve taught to thousands of entrepreneurs, and most importantly, which have allowed them and me to create thriving businesses.
Below, I’ve detailed each one. Learn them and use them as I’m confident the level of your success will increase dramatically.
1) Have a Clear Vision Of Where You Want To Go
If you don’t have a clear picture of the company you want to build, there’s no way you can build it.
Spend time figuring out the precise attributes of the business you would like to build. How much will your revenues be? What products and services will you be offering customers? How many employees will you have? And, by what date will you achieve all this?
2) Have a Written Business Plan
Your vision is your dream. And to attain the dream, you need a business plan that details how you will achieve it.
Among other things, it must document your product strategy, your marketing strategy, and your human resource strategy. Your plan should detail your long-term vision, but focus more specifically on what you must accomplish in the next year.
3) Have Quarterly, Monthly, Weekly, And Daily Goals
If you were able to draw a line from where you are now to where you want your company to be, that line would be known as a trajectory. Success is about getting on the right trajectory. That is, as long as what you accomplish today, this week, this month and this year progresses you farther and farther along the line (versus going below the line or stagnating) then you will eventually reach your long term goal.
To stay on the right trajectory, you must set quarterly, monthly, weekly, and daily goals. Each goal should be set with an understanding of the larger goal. For example, figure out what you need to accomplish this quarter in order to properly progress towards your annual goal. And then figure out what you need to accomplish this month to properly progress towards your quarterly goal. And so on.
By creating and achieving these smaller, periodic goals, you start to ride the trajectory to your ultimate vision.
4) Educate Yourself Continually
To succeed you need to continually invest in educating yourself.
You should be reading the right books. You should be attending the right seminars, conferences and trade shows. And you must read the right newspapers, magazines, newsletters and blogs.
Do not skimp on spending money on educating yourself. Investing in your education (and that of your key employees) will generally give you a larger return on investment than anything else in your business.
5) Satisfy Your Customers
Satisfied customers are the key to your success. If you can’t satisfy customers, you will fail.
They say it takes one dissatisfied customer to undo the good that nine happy ones provide by spreading the word about their experience with you friend-to-friend or in online reviews.
You can satisfy your customers on the front end (at or immediately after the time of the first sale) by making the sales and delivery process smooth and seamless, by reducing the customer’s participation or steps required to use the product, by managing their expectations so that what they get is exactly what they were promised, and of course with spectacular customer service and support.
In addition to providing a great experience as just specified, the product or service you deliver them should be high quality and fully satisfy them.
6) Market to Your Customers
This is a big one, particularly since most business owners don’t do it enough. Most entrepreneurs and business owners are so focused on getting new customers that they neglect their current customers.
And, unlike prospective customers, current customers have a track record of buying from you…and are much more likely to buy from you again than prospective customers.
So spend time listening to and communicating with your current customers. Find out what that truly want and need, and stay top-of-mind so they buy from you again and again.
7) Be Laser-Focused in Your Work
This ties in with #3 (Have Quarterly, Monthly, Weekly, And Daily Goals), but deserves its own mention. Which is this: be sure to focus on one aspect of your business at a time. Conversely, trying to do too many things at once will diffuse your focus and inevitably result in failure.
Limit the number of projects you’re working on until they are finished. Remember, twenty projects that are 99% complete but not live yield less revenue that just one project that is 100% complete and live.
As we keep hearing in the presidential debates, you, the entrepreneurs and small business owners, are the backbone of our economy. Follow these strategies and you’ll be more successful, and so will the economy!
7 Proven Strategies to Methodically Grow Your Business Infographic
Below is an infographic of this article for quick reference.
Strategy #2 above is to have a written business plan. To help you expertly complete your business plan, we put together the slide presentation below to walk you through the “10 Key Elements of a Business Plan.”
Bed and Breakfast Business Plan Template
If you want to start a Bed and Breakfast business or expand your current Bed and Breakfast, you need a business plan.
The following Bed and Breakfast business plan template gives you the key elements to include in a winning Bed and Breakfast business plan.
Below are links to each of the key sections of your Bed and Breakfast business plan:
Service Business Plan Template
If you want to start a Service business or expand your current Service, you need a business plan.
The following Service business plan template gives you the key elements to include in a winning Service business plan.
Below are links to each of the key sections of your Service business plan:
Mobile App Business Plan Template
If you want to start a Mobile App business or expand your current Mobile App, you clearly need a business plan.
The following Mobile App business plan template gives you the key elements to include in a winning Mobile App business plan.
Below are links to each of the key sections of your Mobile App business plan:
There is one business plan tip I give above all else, particularly if the goal of your business plan is to access funding.
This tip is to treat your business plan like a brochure or marketing document with the key goal being to get readers excited about your company. This tip and other critical business plan tips are explained in detail below.
Your Business Plan as a Brochure
When you create a brochure, you must determine they key value propositions that customers care about. For example, in the toothpaste business, certain brands promote whitening your teeth. Others promote anti-cavity properties. Some focus on fresh breath and still others promote all or several of these value propositions.
What toothpaste companies do is very simple, but powerful: they figure out what their customers want, and then position their offering as the perfect solution. Importantly, in addition to simply telling customers their product is right, they prove it. For instance, they mention their ingredients, show before and after photos, or tell what percentage of dentists trust them.
Identify Your Target Audience & Needs
Now, let’s move back to your business plan. Because a successful business plan does much of what the toothpaste companies do. The first thing to do when creating your business plan is to identify your target audience. This audience may, for example, be banks, angel investors or venture capitalists.
Next, think about their needs. Their needs are generally to fund a company that’s going to give them the greatest potential for a high return on their investment with the lowest possible risk
Prove Your Case in Your Business Plan
So, to write a business plan that gets you funded, you need to convince readers that you have a business with growth potential and with as little risk as possible.
You also need to show you have a product or service with unique attributes. And you want to prove your market is large, and ideally growing, and present your proof in the form of market research and statistics.
Finally, you want to prove the competence of your team. Show what your team has already accomplished in the past, in order to give readers the impression they can do it again.
Some additional business plan tips to boost your chances of raising funding include:
- Proofread your plan. Typos and/or grammatical errors will cause you and your plan to lose credibility.
- Keep it concise: 15 to 25 pages is a great length for a business plan. Don’t bore your readers with useless information.
- Create realistic financial assumptions: don’t show growth rates that no company in the history of the world has ever achieved
To summarize, in order to write a business plan that gets you funded, you need to start by considering your target market. Think about their needs and the value proposition they seek. Then deliver your answers in a well-written, easy to digest document that excites rather than bores them. Keep your plan concise and well-formatted, with realistic assumptions, and you will put yourself in the best position possible to raise money for your business.
Business Plan Tips Infographic
Below is an infographic of this article for quick reference.
Business Plan Tips Slideshare
We put together the slide presentation below to show you “10 Tips For a Successful Business Launch.” In addition to the business plan tips above, this should help you better understand the keys to ultimate building a thriving business. Good luck!