Common Business Plan Mistakes

Business plan mistakes are more common than you might think!

Are you writing a small business plan for your new business? If you take a bit of time now to read about some of the more common business plan mistakes, you may be able to avoid them.

Not Writing for the Right Audience

Who will be reading your plan?

Write the plan with their needs in mind, maybe you need to have several versions of your plan.

One for financiers and one for family and friends who are thinking about bank-rolling your business.

Or maybe you need another one for your employees.

Just don't hand out the one for your family to the local bank manager, or give the financier plan to your employees.

No Research to Back Up Your Claims

Do the research. I can't be any clearer than that.

If your prospect asks just one question about the claims you make in your business plan and you are not able to answer them, it is all over. Do the research, analyze the data and understand what it means, before you put anything down on paper!

Over-estimating the Value of Your Business Idea

Do you have a good business concept?

If it is a new idea, or you have developed a new product or an improved method of delivering an existing product to your customers, you need to demonstrate that your assumptions about the demand are reasonable.

This is the very core of your business plan. If you over estimate the value of the product or service in the market, none of your strategies, goals or objectives are likely to be achieved. No value = no sales = no profit, no matter what your plan says.

All Flash and No Substance

Is your business plan going to be printed on high quality glossy paper with custom designed graphics? Have you selected an expensive binding?

Don't.

You are better off spending the money on obtaining high quality data on your industry or paying someone to put together your financial data for you. Most of the people who read your business plan are unlikely to be impressed with the presentation if the content is not substantial and designed to answer their questions about your new business.

Having said that, you do need to pay some attention to the presentation. Spelling, grammar, page layout are all important. You need to make your document as easy to read as possible!

Inconsistent Use of Data

If you say that you are expecting $100,000 worth of sales in your first year of operation in the section about your sales projections, make sure that number is reflected in your profit and loss forecasts as well.

If you are planning to offer credit to your customers make sure that the cash flow projections recognize the cash coming in at the end of the credit period rather than when you make the sale.

These are just two examples of how an inconsistency can occur in your business plan. Inconsistency is a fatal flaw in a business plan. Check and re-check everything to make sure your plan flows and makes sense!

Creative Accounting

What ever you do not get creative with the numbers!

When you are starting a small business the primary reason for writing a small business plan is to use it to seek funding. The people who will be looking at it will have a lot of experience with reading proposals for new businesses. In all probability they will have knowledge of the industry, not to mention experience with business management. If they are good at what they do, and you need them to be, they will know their stuff when it comes to accounting for business.

They will spot any creativity in your numbers a mile off!

Avoiding these common business plan mistakes

I hope you have found this page of business plan mistakes useful. It is my hope that this page will help you to avoid as many common business plan mistakes as possible!

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