Creating a business plan is a good place to start when you start your new company. Not only is it a helpful tool when applying for loans or getting investors, it also serves as a roadmap for your business.
Your business plan can become a great partner or a massive obstacle. Avoid the latter by avoiding these common mistakes when creating your business plan:
1. Using text instead of graphs
You can probably spend days talking about your aspirations, goals and strategies for your business. With all that energy and ideas bouncing around in your head, it’s easy to get carried away when creating your business plan.
It is possible to have a detailed business plan without boring your reader to death. Whenever possible, ask yourself whether a certain piece of information can’t be better illustrated with the use of an image or a graph, instead of simply typing it out.
2. Not being flexible
Your plan will be a guide that keeps you and your business on the right track. This track, however, is more of an off-trail path with multiple hills and forks. Your plan needs to indicate that you are ready to climb the hills, and that you will be able to make the hard decisions at the forks. Your business and your plan needs to be flexible enough to evolve with a variety of situations.
3. Being vague on the money part
At the end of the day, your business needs to make money. When creating your business plan, make sure you explain thoroughly how you intend on doing so.
Leaving too many questions and blank spaces in the financial section of the business plan is one of the most common mistakes made by new entrepreneurs. You need to be able to explain in detail how your business will make money and what expenses you will incur in the process.
4. One plan to rule them all
Avoid the mistake of thinking that one standard business plan will be all you need to get your business off the ground. Compiling your business plan is a good start, now go and do it again! During the start-up phase, you will require at least a few different variants of your plan.
Before you present your business plan to anyone, make sure you have a version of your plan that is written with that particular reader in mind. A bank and a potential partner will be looking for different things in your plan.
5. Only focusing on today
This is an easy mistake to make as the correct thing is very hard to do. You are not a psychic, so how should you know what will happen to your business in 5 year’s time?
The truth is, you should be able to answer this question in as much detail as possible. Make sure to include future projections in your plan. How do you see your business growing and developing in the future? Don’t be scared to list obstacles, with solutions, that might occur in future.
6. Assuming that everyone understands your industry
Just because most people use a cell phone or frequent restaurants does not mean they understand the ins and outs of that industry. Don’t lose your reader because of unfamiliar terms and jargon.
7. Refusing to have it proofread
When you put your entire business down on paper, it is understandable that you want to limit the amount of eyes that gets to view it. That said, it is extremely risky to present your plan to a potential investor or partner without having had it proofread for spelling and grammar mistakes.
Ask someone you trust, or draw up a nondisclosure agreement if you don’t want to take any chances.
8. Not being original
Your business is original, and your business plan should be as well. Never copy and paste from other plans or sources. If you’re using a template to create your plan, make sure that ALL the content on your plan is original and in your own words.
9. Lack of consistency
Your facts and statistics should be consistent throughout the plan. Pay special attention to any figures or cost projections that you might use. Contradictory figures will make your plan look sloppy and will make it seem like you are unsure about the facts.
10. Over- and understating
Your business plan is like a resume for your business, and just like a resume, your plan should make your business look good, while still being completely honest.
Don’t highlight your shortcomings, but don’t deny them either. Be optimistic about your projected profits and growth, but don’t overestimate them. Don’t underestimate your costs and don’t deny the competitors in the industry. Honestly really is the best policy.