Question: What are the most common mistakes made when writing a business plan?
There are many errors made by inexperienced business plan writers or business owners who fail to see why their plan was not accepted. But on the other side of the table, the following mistakes are common: Ignoring the Competition: A business does not operate in a vacuum. There are direct and indirect competitors who will fight tooth and nail to retain their customer base and market share. All too often, the business team will state that their product and service is so great that there are no competitors. This inward attention on the business shows investors that the management is over-confident and may not foresee external factors that can impact the business. Incredible Financial Projections: A growing company is what investors want to see and the growth patterns should be realistic and attainable. Financial data that is inconsistent with industry norms and overly aggressive can quickly have your plan shelved. It is far better too error on the conservative side here and work with your accountant on attractive and realistic numbers. One Billion Consumers: Claiming your market size as huge and customers as everybody will quickly lose all the credibility of your plan and business. Maybe in the future you can attack different market segments but for now focus on one or two niches you can effectively serve. By showing you deeply understand the clients in a narrow market and can serve their needs, you'll win over the confidence of your banker or investors. Procrastination: Many business owners under estimate the time and effort required to build a successful business plan. Don't delay. If you need capital in six months, now is the time to put together a plan and raise the money. The Big Deal: A business may have signed a big contact with a major company and over-emphasis of this deal can be perceived as a weakness. If 80% of your revenues are based on a one-company contract, your company could tank if the deal goes sour. Highlight that your company is adept at forging strategic partnerships or winning big contracts and this skill will be utilized to diversify the client base.