If you want yourself and your business concept to be taken seriously, avoid these commonly-seen mistakes in your business plan.
1. Market share too high for a startup, e.g. 10%.
2. Starting three lines of business at once, rather than succeeding at one before launching the next.
3. “A low price is the only differentiation I need.”
4. "I can personally produce professional-appearing website and marketing materials."
5. Sales Forecast grows at unrealistic pace, uses most of the time of the owner, assumes customers pay right away, and has no source/model from a currently operating business in a similar field.
6. No salary for owner is shown in fixed overhead expenses.
7. Marketing budget is too low.
8. IT budget is too low.
9. No “contingency” is considered for unknowns in the Cash Flow Forecast.
10. Risks are not presented and discussed.
11. “I can get a loan without collateral and without investing 20-30% of amount needed myself.”
12. Timelines that assume everything goes well and everyone cooperates according to your desires.
13. “I have no competition.”
14. Your plans for the 4 P’s do not support the Positioning you chose.
15. Buying new equipment when used versions or leases are available.
16. Failure to plan to buy software for bookkeeping, customer data base, order processing, inventory, etc.
17. No recognition or description of key operations processes (hint: if you include flowcharts of these processes in the Appendix, you will really stand out as a disciplined planner).
18. Price is too low; contribution (gross) margin is too low; profit is less than 10%.
19. Financials do not include loan repayment!
20. Risks are not described and assessed.
21. No recognition of key skills that are missing and no plan to obtain them.
22. Owner plans to spend almost all of his or her time in operating the production of goods/services, rather than managing the business.
23. Unrealistic timeline to launch, especially if driven by acquiring a particular store location.
24. No page numbers; no outline or section numbers.
25. No “deal” statement.
26. Inconsistencies: text contradicts itself; tables or financials don’t add up.
27. No milestones offered.
28. Financials not summed up into a small table.
29. Executive Summary is “creative writing” rather than a summary of the text that follows, or is longer than two pages.
30. Pages and pages of beliefs, philosophies, and values rather than practical tactics for succeeding in business.
What is the Reader Looking For?
Businesses fail because their differentiation is weak or absent, they fail to communicate it to the target audience (marketing), or they run out of cash before enough prospects hear the message. So your reader is looking for:
- Clear and strong differentiation in meeting a known market need
- Effective marketing plan: message, money, media, timing
- Reasonable sales, cost, margin, and cash flow estimates: not too optimistic
- Plans to obtain adequate financing
- Indications that the owner is a good investment: he or she understands how to organize and manage a business, deal with customers, carry out plans as scheduled, keep records, and pay back debts
So write a plan that’s as accurate and disciplined as you yourself must be to succeed as an entrepreneur! If you need help, call SCORE – they’ve seen it all before.