There are many elements that make a good business plan. It oftentakes time, patience and many revisions before you get it right.Unfortunately when rushing to get your funding in place and launch yourbusiness, your plan can get neglected. Below we have highlighted a fewof the very common mistakes made when writing a business plan:
1. Unrealistic Financial Projections
Most Canadians are familiar with the businesses on CBC’s Dragons’ Den who grossly overestimate the value of their company and are chastisedand shot down by the dragons. Lenders and investors expect to be shown a realistic picture of where your business is now and where it hopes tobe, therefore if the plan is overly optimistic with no explanation ofthe projections, it will ring warning bells and cause the plan to berejected.
2. Not Defining the Target Audience
No business will appeal to everyone. You must define your specifictarget market, present how you have made these assumptions and outlinehow you will specifically target this market.
Need help defining your target market and learning about primary andsecondary market research? Small Business BC offers seminars on marketresearch (hyperlink) and one-on-one consultations with an in-housemarket research expert.
You may believe your business idea is the next big thing but you need to be able to back-up your claim. Over-hyping your business idea andlittering your plan with superlatives like hottest and greatest does not substantiate your product or service. Wow them with you business idea, research and financial plan, not with the words you think they want tohear.
4. Bad Research
All research must be double checked and substantiated. By usingincorrect or out of date information you will discredit your businessidea and the remainder of the plan.
5. No Focus on your Competition
Even if you think you have a ‘unique’ business idea and are sure that no other business like yours exists, check and double check. There isno such thing as no competition. Even if your business is one of kind,it comes down to the dollar; if your business didn’t exist, but thecustomers’ need still existed, where would they spend their money?
Equally if you highlight your competition too much the investor willworry that the business will not survive. Focus on your niche, whatdifferentiates you from the competition, how you plan to compete in themarketplace and paint accurate picture of what the industry is like nowand where you see it going in the future.
6. Hiding Your Weaknesses
Do not hide your weaknesses but do not highlight them too much. Every business has its weaknesses but by hiding them or highlightingthem too much you will put off the investor. The only way to addressthese weaknesses is to include a detailed strategy of how you planaddress these problems.
7. Not Knowing your Distribution Channels
Have a secure plan how to provide your service or distribute yourproduct. Including all possible channels in your plan withoutsubstantiating why these are the correct channels and how they willreach your target market will make the investor assume that you havejust thought of the list off the top of your head. The ability toarticulate your strategy about how your product or service will reachyour client is vital.
8. Including Too Much Information
If you were an investor, would you want to read a 200 page businessplan? Most investors have a mental checklist of 10 to 12 points thatthey are looking for in the plan, everything else just gets in the way. The purpose of your plan is not to demonstrate the depth of yourknowledge but to focus on the key elements of your business. Clear andconcise writing is always appreciated and if you have additionalinformation which you would like to include in the document, create anappendix.
9. Being Inconsistent
Highlighting different target markets, quoting conflicting statistics or having competing strategies within a plan will make an investorchallenge whether you know your business and its market well enough. Sections of plans are often written on different days or by differentpeople and then pasted together into one document resulting ininconsistency. Take time to review each section of your business plan.
10. One Writer, One Reader
Make sure you ask several people to review your plan beforesubmitting it. It is easy for you to glaze over spelling mistakes andgrammatical errors because you know the information inside and out. Another set of eyes will help your plan to look more professional andensure that it reads correctly.
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