I’ve been helping a number of clients lately with their business plans and I’ve noticed some common mistakes keep surfacing. To begin with, many people underestimate the amount of time, thinking and patience it takes to put together a decent business plan. Often the reason they are ‘doing’ a business plan is because they’re seeking a loan or investment to start or grow their business and they’ve been asked to present their business plan. So, make sure you set aside sufficient time to work on your business plan and allow time for the many revisions it will take, before you get it right.
Here are 10 of the most common mistakes in putting a business plan together:
1. Not defining the target market
When working alongside my client I often ask who their target market is. And most people say everyone. They think that if their target market is too narrow they will have fewer customers. But no business will appeal to everyone. It’s best to define your specific target market, present how you have made these assumptions and outline how you will specifically target this market, backed by sound market research.
2. Over-hype
Being an understated kind of gal I don’t go for all that salesy hype stuff! Your business idea may be the next big thing but make sure you can back-up your claim. Over-hyping your business idea and scattering your plan with flashy words does not substantiate your product or service. Wow them with your business idea, research and financial plan, not with the words you think they want to hear.
3. Poor research
All research must be double checked and substantiated. Don’t be lazy by using incorrect or out of date information. This will only discredit your business idea and the remainder of the plan.
4. Failing to check out the competition
You may think you have a ‘unique’ business idea and you are sure there’s no other business like yours – but check, double check and even triple check. There is no such thing as no competition. Even if your business is one of a kind, it comes down to the dollar; if your business didn’t exist, but the customers’ need still existed, where would they spend their money?
Similarly, be careful about highlighting your competition too much; the investor may worry that your business will not survive. Focus on your niche, what differentiates you from the competition, how you plan to compete in the marketplace and paint an accurate picture of what the industry is like now and where you see it going in the future.
5. Hiding your weaknesses
Don’t hide your weaknesses but don’t highlight them too much either. Every business has its weaknesses but by hiding them or highlighting them too much may put the investor off. Instead include a detailed stategy of how you plan to address these weaknesses.
6. Not knowing your distribution channels
Make sure you have a plan on how you are going to provide your service or distribute your product. Include all possible channels in your plan and substantiate why these are the correct channels and how they will reach your target market. It is crucial that you are able to articulate your strategy about how your product or service will reach your client.
7. Including too much information
Think of your reader, your potential investor. They are busy people and most won’t read a 200 page business plan? Generally, they have a mental checklist of 10 to 12 points that they are looking for in the plan, everything else just gets in the way. The purpose of your plan is not to demonstrate the depth of your knowledge but to focus on the key elements of your business. Clear and concise writing is always best and if you have additional information, which you would like to include in the document, create an appendix.
8. Being inconsistent
Highlighting different target markets, quoting conflicting statistics or having competing strategies within a plan will make an investor challenge whether you know your business and its market well enough. Sections of plans are often written on different days or by different people and then pasted together into one document resulting in inconsistency. Take time to review each section of your business plan.
9. Unrealistic financial projections
Don’t do this. Lenders and investors expect to be shown a realistic picture of where your business is now and where it hopes to be. Therefore, if the plan is overly optimistic with no explanation of the projections, it will ring warning bells and the plan will be rejected.
10. Only one writer, one reader
Make sure you ask several people to review your plan before submitting it. It is easy for you to glaze over spelling mistakes and grammatical errors because you know the information inside and out. Another set of eyes will help your plan to look more professional and ensure that it reads correctly.
I’d love to know your thoughts. Do you agree with these ten ‘mistakes’?
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Awhimai Reynolds is a Business Adviser and Coach with the Trusted Adviser Network (TAN). She is passionate about women in business and leadership. Contact Awhimai at www.iWahine.nz or on FB https://www.facebook.com/iWahineNZ/ and LinkedIn https://nz.linkedin.com/in/awhimaireynolds
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