When writing your business plan, be aware of these common mistakes that small business owners make.
- Business plans serve a multitude of purposes. In most cases, they are used to attract investors by showcasing your vision for your company.
- Business plans must be presented professionally, without errors, and be in tune with the current market.
- Avoid presenting unrealistic goals or not giving sufficient details on your planned growth strategies.
Business plans typically serve three purposes:
- They provide clarity and outline an action plan for developing a strategy around growing your business.
- They provide a foundation for your business idea that can be helpful when trying to secure funding from investors.
- They demonstrate to others (potential partners, executives, and mentors) what your vision is for the company and how you plan to get there.
One of the many challenges of writing a business plan is that it is typically written for a number of audiences, so the information within it must satisfy as many questions as possible while keeping it succinct and focused. The one thing you can guarantee is that no mentor, venture capitalist, or business professional who reviews your plan will come away thinking the exact same thing. The reason is that each person has their own interests in mind and looks for specific points that help them make a decision.
So, while you will very likely run into some areas where you’ll have to elaborate – or alter – your line of thinking, there are a few things you can do to help get your plan off on the right foot, no matter who might take a look review it.
Don’t put your business plan in danger of being discarded; avoid these six pitfalls.
Attaching your business vision to dated technology or declining markets
When spelling out in your business plan the opportunity you see for a product or service, you can’t assume that the idea has automatic appeal in the real world. A proper business plan (and anyone who you hope will give you money) will ensure you are setting yourself up for success. This means you must develop a business vision around something that will make an impact on an emerging or existing market. Those markets that are dwindling or are being overtaken by new industries will make it incredibly difficult for you to get funding.
For instance, what would your reaction be if someone developed waterproof ink for typewriter ribbons? You wouldn’t necessarily be enthused, because the number of people looking to buy something like that is incredibly small.
Not acknowledging your company’s weaknesses
To be a successful small business owner, you must know that it’s impossible to do everything on your own. Mentors and investors don’t expect you to successfully juggle the production, operation, administrative, marketing and sales aspects of your business, at least not for the long term.
An impactful business plan has a strategy for dealing with weaknesses. Don’t convince yourself that investors won’t provide funding if you draw attention to a challenge you struggle with. If you acknowledge only what you’re good at, those who review your business plan will very likely ask the tough questions that your business plan doesn’t address.
Identifying your core customer as everyone
There is no product or service that is everything to everyone. If that were so, we’d all be driving the same car. The fact is, your product or service is specific and beneficial to an ideal type of customer, not anyone who is willing to fork over a handful of cash. It’s tough to wrap your head around, particularly when you’re just starting out and when you need every customer possible to make your case.
As your business grows, though, you’ll be positioned for success only when you aren’t trying to please everyone who comes through your door. Your market research will not only help you target the “right” customer for your business, but it will help you determine the proper market size for your projections.
Having unrealistic growth projections
Yes, a business plan will require you to do some legitimate math, and not just estimate what you believe to be the opportunity. You must first estimate your market size and use as many resources as you can to determine what kind of audience you’re talking about.
The stronger a position you can take as to what opportunity the market provides and how you can capture consumers’ attention, the more likely you are to secure funding. This includes understanding the market value (how much is spent by various types of customers), not just the market size. If you’re looking to grow a presence online and want to display how you’ll capture a sizeable market share of web traffic, you may use data from search engines to determine how many people are looking for keywords related to the products you provide.
Acknowledging your competitors, but not analyzing them
It’s common for new business owners to say, “We have no competitors,” in the hopes of appearing to be unique, but it’s far more impressive to study your competitors.
When putting together this section of your business plan, it’s important to know as much as you can about the people you’re going up against. It’s important to be as objective as possible: What are they doing right? How are they succeeding? Why do customers choose them? Knowing this information helps you prepare your own strategy to differentiate your business from theirs.
Not providing a strategy
Even worse than presenting unrealistic growth projections is not providing any specificity about your growth strategy. For instance, you can’t just say you want to be the best tanning salon in the state. Instead, you have to give a detailed outline of how you plan to become the best or achieve your company goals. Although you want the plan to be detailed, don’t overload the plan with objectives. Stick to less than five objectives as a way to keep the business plan focused and maintain the reader’s attention.