Coming up with the perfect idea for a business isn’t uncommon. Everyone’s had a good idea. But fewer people really follow through with it. And even fewer people can manage to prove to others how they plan on following through with it.
That’s where a great business plan comes in. No one will believe that you can reach your destination if you don’t show them a solid and impressive roadmap first. But crafting a bulletproof business plan is so much harder than anyone realizes until you get into you.
When it comes to developing a business plan, knowing what not to do is the most useful thing you can learn. So here are the top 7 business plan mistakes that you absolutely must avoid:
The Plan Itself Is Unattractive, Uninteresting, or Unprofessional
You’re supposed to avoid judging a book by its cover. But everyone does anyway. Nobody will care if your business plan is solid and your idea is revelatory if the physical copy of the plan that the potential investor or client is leafing through looks bad. It’s a splitsecond turnoff.
Have a clean, eyecatching logo on the front and a welldesigned cover. It’s your introduction to outsiders as a business, and it should make them want to sit up and pay attention. The contents of the physical copy of your plan should be visually appealing, as well. The text of your business plan should be well organized on the page so that’s it’s easy for the reader to separate out the components of your plan.
If the language used in your business plan doesn’t excite its reader, the reader isn’t going to get excited enough to want to get involved in your business. Selling yourself and engaging their emotions while still maintaining a clear and professional tone is a tricky balancing act. But it’s the best way to get people to really pay attention to the plan itself.
This shouldn’t need to be stated, but let’s stress it just the same: your business plan should be spelled correctly. If your business plan has even one tiny typo that you overlooked the reader will instantly disregard you and your business. It seems harsh, but would you want to put your faith and money in a person who can’t spell and uses a bunch of tired cliches?
The Plan is Vague
So you have a great business idea. Awesome. Now how are you going to make it happen? No, really… lay out every single step. If your business plan has holes in it, doesn’t answer every question, or doesn’t have enough details to prove that you have a clear plan of action, then nobody is going to believe that you know what you’re doing. Anyone can have a great idea. It’s much harder to have a great business plan that clearly states each step of the process to success.
This also means laying out contingency plans if necessary. Investors want to know what you intend on doing if you’re not breaking even by the time you’d initially said. This means telling investors what’s in it for them. The more specific details, the better.
If you were reading someone else’s business plan with thoughts of investing or getting involved in the operation, the most discouraging thing would be to walk away with questions unanswered. A vague plan does not instill confidence. That being said, it’s easy to go too far in the opposite direction and make the business plan mistake of…
The Plan is Too Detailed
Not every business runs into this problem. But it’s a common one for any business that involves a lot of jargon. Tech startups, legal businesses, pharmaceutical businesses, etc. All of those business plans often make the mistake of including too much of their technical jargon in the business plan proposal, and it shuts you off from your intended audience.
If a client, investor, or whoever can’t understand your business plan because it’s so bogged down with extraneous information and technical phrases that are foreign to a layman, then they’re not going to bother trying to piece it all out. They’ll just walk away.
If your business plan is overly specific, for example, “Here’s everything we intend to sell in our retail store! Here is a list of every supplier we hope to work with! Here’s a novel devoted to all the retailers that are our inspiration! Here’s how we intend to price every scrap of merchandise!” then the reader is going to slam on the mental brakes. That’s way too much.
Think about what your potential business plan readers will need to know and what they will want to know. Anything is really just for your own benefit, and you can leave it out unless someone specifically asks what color you intend to paint the inside of your business’ space and what the employee uniforms will look like. This goes doubly for the business plans of tech startups or for manufacturers. It’s unlikely that anyone will need to know the processing power unless it’s somehow extremely relevant to the product. Use your best judgement.
You’re Being Overly Optimistic
A sense of realism is required when forming a business plan. Tell everyone what you hope to achieve, and tell them how you think your plan will get you there. But try to stay grounded in your assumptions and goals.
Nobody anticipates you generating any serious kind of revenue in your first year. So don’t say that that’ll happen when deep down you know that it would take a miracle just to break even in the beginning. Don’t overestimate or exaggerate your business’ capabilities. Everyone knows that starting a new business is hard, so just be straight with them.
This also applies to the “facts” and data that you include in your business plan. Are those numbers a little too optimistic? Are you leaving out the facts that would contradict the optimistic success of your business because you’re afraid that the data will make your business look less feasible? Then maybe you need to reevaluate somewhat, or at least come up with alternative data to support your business plan.
Just make sure that all the information you include is accurate and uptodate! Don’t be vague about the success rates of ondemand delivery companies over the last couple years. Be honest and specific. It’ll mean more to have a plan ready to combat the realistic likelihood of problems that your business will face rather than if you just skipped along pretending like nothing bad will ever happen to your business.
A grounded sense of realism, levelheadedness, and preparedness will instill a greater confidence in potential investors than an optimistic and idealistic approach to the business plan. Prove to everyone that although you’re hoping for the best, you’re prepared for the worst, and you are clear about what’s most likely to happen. It’s often somewhere in between the two.
Your Claims Aren’t Accurate
Similar to the excessive optimism, it’s easy to get so caught up in selling your business plan and convincing everyone around you that this is going to work. But that’s when you start getting sloppy with your research and the claims you state in your business plan.
If you’re claiming that there’s no competition, that investors are guaranteed to make their money back, or that there’s no risk involved in your new business, everyone in the vicinity is going to have about ten thousand red flags shooting up. Not only will nobody believe you. They’ll run out of there as fast as they can.
If your research and claims seem too good to be true, everyone will suspect that it’s probably just that; false. Nobody believes that you don’t have any competition whatsoever. You might be the only golf speciality store in your town, but you’ll still face competition from online orders that come at cheaper prices. So they’re going to want to know how you intend to combat that competition. They don’t want to hear your false claims that competition simply doesn’t exist.
Again, if your research isn’t 100% accurate you need to toss it out. If the research makes you look bad you have two options:
1. Explain how you plan to combat the problems that the research suggests that your business will run into, and turn the negative findings of the research into a positive display that you’re ready to handle the challenges to come.
2. Find alternative research that supports your claims, instead. But make sure that it’s unbiased and totally accurate. The key to maintaining realistic claims and information in your business plan is to keep a cool head. In both writing the business plan and in presenting it to people, you might have moments of panic or defensiveness where you feel the urge to make too bold of a claim or fudge the numbers and statistics a bit in your favor. Don’t do it. Just stay calm, be clear and forthright, and have an answer and a plan ready for any question that might come up rather than relying on false or overblown claims and facts.
If an investor poses a question that you don’t have a plan or answer for yet, don’t freak out and start defending your business plan with pseudoscience. It’s ok to not know yet. Calmly thank them for bringing that hole in your plan to your attention. Tell them that you’ll be thinking about potential solutions and that you’ll go over those strategies together later. That’s way more confidentsounding than throwing some iffy claims at them.
You Haven’t Asked for Feedback
If you haven’t gone through the rough draft of your business plan with your friends, coworkers, nextdoor neighbors, and your grandmother twice each, then you’re not ready to put it up in front of strangers just yet. Before you start seriously pitching your business plan, you need to get some solid feedback first.
Ask anyone and everyone whose opinion you value to look over your business plan. Don’t try to sell it to them. Just try to see if the business plan can sell itself yet, but remember that the first few drafts of your plan probably won’t be quite that successful.
You can’t be the only brain involved in the making of a good business plan. It takes some outside perspective, and more than a few extra sets of eyes and ears. If you’re too afraid of what your peers and family might say, then you’re not ready to start your own business. This is probably the first time you’ve really put your business baby out on the line like this. But it’s an absolutely necessary first step to take.
Keep getting your business plan in the hands of the people you respect, and keep getting their honest opinions, feedback, and criticism. Your business plan will be better for it. If you work at it with the help of others long enough, it’ll be bulletproof by the time you actually get it up and present it in front of potential clients, investors, and total strangers.
There’s just no way to catch every little thing all on your own. This business might be your brainchild, but it’ll take the help of many people to get the business plan ready to stand on its own. The process of writing a truly great business plan is a long one. It can take months or even a full year to finally get it just right. So get it in front of as many people as you can and gather all the feedback that they offer you!
You Don’t Have a Clear Target Audience
Let’s face it; your business is not going to appeal to everyone. Some people simply won’t be interested in investing in what you have to offer. People are entitled to their own tastes and preferences, and you’re not going to be able to make everyone happy.
So don’t act like it in your business plan. If you spend half of the plan trying to convince every demographic to love your products then you’ll never generate any real business once you’re actually up and running. And the likelihood of you even getting up and running decreases the less you hone in on your target audience.
The business world (and its investors) love a niche market when they can get it. If you have a surefire business plan that will appeal to the Baby Boomer generation, or a plan that will hook every cat lover in the state, then market your business plan to those potential consumers and investors.
It’s ok to not scramble to include every age, gender, or budget. If your business idea is to cater to wealthier retired boatenthusiasts then go all out in your efforts to market to that specific demographic.
But you’re simply not going to appeal to every single potential customer, and potential investors know it. Know your target audience. Do the research on that specific group. And have a plan to win over their hearts, business, and money. When it comes to appealing to your target audience, the phrase “go big or go home” is always applicable.