You might have a brilliant home based business idea but if your business plan is riddled with mistakes you will not be able to convince a bank or investor to pump money into your business. The reasons why many entrepreneurs make mistakes when drafting a business plan are lack of knowledge in writing a business plan, rushing to write a business plan and not hiring a professional. Every aspiring business owner should have a business plan. And the business plan must avoid several major mistakes that make a business plan a “poor” business plan.
The following are common mistakes to avoid when writing a business plans.
1. Incomprehensible business plan
Social media has killed the art of proper writing. When writing a business plan written in proper English. Make sure it does not contain errors in spelling, punctuation, grammar and style. A business plan is a reflection of your level of knowledge and education. If your business plan is full or errors and poorly written the reader might conclude you lack intelligence and not qualified to run a business. Proof read your document 5 times. Ask a friend to proof read it for you.
2. Poor formating
Your business plan should follow basic rules of typesetting. A business plan with inconsistent margins, missing page numbers, incomplete charts and tables without headings, or a missing table of contents will not only be difficult to read but will also convey a negative image to the reader.
3. Incomplete business plan.
Make sure your business plan does not miss any aspect of a sound business plan. A business plan should include statements of the vision and mission of your business; the core values,SWOT analysis; information on the customers, products and services; marketing and sales information; management team; analysis of competition; and detailed financial projections (e.g. monthly cash flow and income statements, as well as annual balance sheets–going out at least three years to five years.
4. Too shallow
Don’t be brief and assume the reader will just assume what you mean. Include all the important details in your business plan.
5. Too much information.
Too little information is bad but too much information is equally bad. If the business plan is over 200 pages, the reader will get bored going through it. Try to keep things minimal by using figures, charts and tables. Touch on the specific points and leave the general details for the actual presentation.
6. Unrealistic assumptions.
Writing a statement like ‘I plan to profitable by the second year and be the leading provider in my two” that is being to naïve and vague. A more realistic statement would be “I plan to get 20 clients by year end and increase that number to 40 in year two”
7. Business plan built on hot air/guess work
Make sure all the information is based on true facts. Don’t guess the potential size or the market or assume the total number of competitors. Go to your local business bureau offices and gather factual business statistics.
8. Under estimating risk.
There is no such thing as a “no risk” business. Risk can be anything from customer failing to honor payment to you dying. Be aware of any potential risk and write it down and explain how you plan to mitigate against it.
9. Assuming you have no competition.
Just because no one is offering a product/service similar to yours does not mean you have no competition. The competition may not be direct but in-direct. If you are opening a tea shop in an area full of coffee shops you will be in-directly be competing with coffee shops.
10. Lacking plans on how to achieve your goals.
A business plan is full of goals but it must be backed by details on how you will achieve those goals. That includes, marketing plan, sales plan, quality product and management.
Avoid these mistakes and you will be on the road to success. Remember, if in doubt, consult a professional to guide you.