If your business plan is the document that represents your business – particularly to potential investors – then it stands to reason that you want it to be perfect. Well, “perfect” might be a big ask but at the very least you can ensure that the writing is engaging, free from errors, and for a start, you might want to avoid the following all-too-common business planning errors.
Before you even put pen to paper (or finger to keyboard) you may find yourself beset by more important issues; like running your business, for example. Put simply, this excuse won’t wash. Planning is about more than garnering capital so the viewpoint that a business plan is only needed once you’re about to go to the bank is mistaken. Planning focuses your attention on the priority areas of your business – in other words, the areas that need it – and is never wasted time. Besides, it isn’t as difficult as you might imagine; the internet has templates and guidance galore.
That said, don’t rush into writing your plan. A rush job will not impress the audience and any facts, details, analyses or claims had better be checked and double-checked before they are included.
The too-general plan.
Bear your audience in mind. Your plan may be designed to attract investors but equally it may function as your action plan, your financial plan, have a marketing purpose, and so on. Be clear on what you’re hoping to achieve with your business plan and draft accordingly (you may choose to have more than one version to appeal to different audiences/goals).
Yes, you love your business idea. And that love, enthusiasm, and commitment will see you through. But a great idea doesn’t guarantee success. To ‘sell’ your business, you need to demonstrate you have (or understand) the time, money, skills, and actions required to succeed. Too much hype around the concept can be a turn-off. The old cliché is true: investors invest in people, not ideas.
Woolly goals and a lack of detail.
Keep your impressive vocabulary and business-speak for your Start-up of the Year acceptance speech. What people want to see in your business plan is precision, facts, statistics, figures, milestones… in other words, all the measurable detail that leads to results.
Underestimating the competition.
It may seem like a good tactic to downplay the strength of your competitors or simply focus on where they are failing but few readers will be fooled by this approach. After all, if your competitors are still in business then they must be doing something right and so cannot be written off. An investor wants an objective picture of the competition and specifically how you plan to compete.
Too many priorities.
Be focused. Stick to three or four key priorities otherwise your efforts will be diluted and the likelihood is that you will be spread too thinly to achieve much.
Plot an expected growth curve that is realistic, based on facts, and in line with the average in your industry sector (unless you can prove you have a sure-fire angle that nobody has ever tried before and phenomenal success is guaranteed… but good luck with that). Likewise, whatever working assumptions you’ve made in your financial projections, be ready to justify them. What’s more, don’t forget the cash flow angle. It’s seductively easy to focus on production costs, pricing, profits, expenses, and so on but cash flow is essential to your day to day running. Run out of cash, goodbye business. Factor in some reassurances, including a cash flow forecast.
Naturally, these are far from the only business planning errors you could make but address/avoid these and you’ll be well on the way to that “perfect” plan that represents your business.