Lenders and investors can view hundreds of business plans in a single day. Make your business plan stand out from the rest and avoid these common mistakes.
1. Not showing you have the management experience to make it happen. The quality of your people will lend credibility to your ideas and even your financial projections. If your management team isn’t as strong as it could be, join forces with a large board of advisors.
2. Failing to show where your income will come from: what clients pay you and why they pay you. Don’t be too aggressive in setting income projections or you will undermine your credibility.
3. Failing to demonstrate that your business model and long-term cost structure are good enough to make a real profit. How will your business make money? What is your margin structure, what are your costs?
4. Not being clear enough in your product description to allow the reader to quickly see the need and niche for this product. It may seem obvious to you, but not so obvious to the reader not educated in your business.
5. Not showing that the market opportunity is big enough to be interested. How big is your market now and what will it be like in 5 years?
6. Not properly recognizing your competition. Investors know that if there is no perceived competition, there may not be a market for what you offer. The better you can describe your competition, the better you understand your market and the more likely you are to dominate it.
7. Not writing for the target audience. Although the core is the same, the plan should be written with the perspective of banks, equity investors and others in mind. Go as far as you can to tailor each plan to the specific interests of the audience to show that you’ve done your homework and know who you’re talking to.
8. Start with a boring and lukewarm executive summary. This is the first section to be read, and if it’s not exciting, the rest may never be seen. Make it fun and be enthusiastic. It must be independent and generate interest for more. It deserves all the thought you would put into a professionally made promotional piece for your clients.
9. Bad presentation. If you have typos and grammatical errors in your business plan, the reader will assume that the work you do on your business is also sloppy.
10. Say too much. Keep the entire plan to a maximum of 30 pages, with an executive summary of 3 pages or less. If investors are interested, they will request any other information they need. Hobbyists talk about unimportant details in the business plan because they don’t know what to say and what not to say. Hire a professional editor to reduce the number of pages and help you emphasize your strengths.
