5 Common Mistakes to Avoid When Writing a Business Plan

When it comes to writing a business plan, it's essential to make sure that you get it right. A lender will read the executive summary of your business plan and “do it for an olfactory test and then an instinctive test,” said RISBDC business counselor Josh Daly. The lender can decide whether to continue reading or not based on what your intuition tells you. Therefore, it is worth focusing on the executive summary.

Someone without a deep business background should be able to understand it, and should demonstrate that your company is viable in short and clear terms. Daly recommends 1 to 3 sentences each about your business journey, your customer base, the market, the competition, your qualifications and your team. A concise summary should fit about two pages and convince your audience to keep reading. If your plan focuses on obtaining funding, potential lenders should know right away how much money you want to borrow and how the money will be used. For most small businesses, a concise, well-organized business plan should be between 5 and 10 pages. An engaging business plan includes visual elements, when appropriate, to avoid complications when a graphic, chart, or map tells the story more effectively.

An appendix may include additional financial projections or research data to support them. Plans that last much longer don't necessarily provide more or better information, and they risk losing an audience before they're actually read. Your products, services, business model, customers, marketing and sales plan, internal operations, management team, and financial projections must be seamlessly combined. When they see one with spelling, punctuation, and grammatical errors, they immediately wonder what else is wrong with the company. Take the time to research and get a full picture of your company and the reasons why you're ready for success.

To make sure that's never the case, you should get in touch with some of your contacts who have already reviewed the business plans. Investors need specific information about your products and services, but they may lose interest if your business plan focuses on your life story or reads more like a technical manual. A mistake in business plans that new entrepreneurs often make is not properly researching their target market. Unfortunately, the vast majority of plans are barely worth the paper on which they are printed, despite the fact that the business they describe is still going by leaps and bounds. If your plan requires you to market your product or service in a certain way and that strategy doesn't work, you must change your approach or your company could fail. You wouldn't be an entrepreneur if you didn't feel like talking about your business idea, and yet it's easy to get carried away by irrelevant information or technical details. But to set yourself up for success, you'll also need to think about your company name, finances, an operating agreement, and licenses and permits.

Then, if they're interested in learning more about the company, ask them to sign non-competition and non-disclosure agreements before showing them the full plan. But the most difficult thing is to develop a coherent company image that makes sense, attracts others, and offers a reasonable roadmap for the future. There are enough mental obstacles that haunt people and leave them to stop them from ever starting, and the business plan shouldn't be one of them. To ensure that your business takes off successfully it's essential that you write an excellent business plan that will help convince investors to finance you. But the hard part is developing a coherent picture of the business that makes sense, attracts others, and offers a reasonable roadmap for the future. One of the most common mistakes that new entrepreneurs make when preparing a business plan is underestimating or simply not identifying their competition.

But to set yourself up for success you'll also need to think about your company name finances an operating agreement licenses and permits.