Small business plan mistakes - errors in the business plan that cause it to be rejected

 Business Plan Mistakes

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Marketing >> Small Business Plans  >> Business plan mistakes

 

Editor's Note:  Developing your business plan is essential.  If you are using it for the purpose of securing financing, consider that there are many mistakes that mean 90% of business plans are turned down on the first pass.  

Even if you aren't looking for financial assistance but are developing your business plan for your own reasons, it only makes sense to avoid these mistakes.  If these business plan omissions and mistakes are inadequate for financial institutions, should you risk your finances and time on anything less?   

Top 10 Mistakes Made in Business Plans 

by: Jan B. King

Lenders and investors may see hundreds of business plans in a single day. Make your business plan stand out against the rest, and avoid these common mistakes.

1. Not proving that you have the management expertise to make it happen. The quality of your people will lend credibility to your ideas and even to your financial projections. If your management team is not as strong as it could be, join forces with a great board of advisors.

2. Not demonstrating where your revenue will come from - what customers pay you and why they pay you. Donít be too aggressive in setting revenue projections or you will undermine your credibility.

3. Not proving that your business model and long term cost structure is 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 the niche for this product. It may seem obvious to you, but not so to the reader not educated in your business.

5. Not proving that the market opportunity is big enough to get interested in. How big is your market now and what will it look like in 5 years?

6. Not adequately acknowledging your competition. Investors know that if there is no perceived competition, there may be no market for what you are offering. The better you can describe your competition, the better you understand your market, and the more likely you will dominate it.

7. Not writing for the target audience. Although the core is the same, the plan should be written for the perspective of banks, equity investors, and others. Go as far as you can to tailor each plan to the audienceís specific interests to show youíve done your homework and know to whom you are talking.

8. Starting with a boring, unenthusiastic executive summary. This is the first section to be read, and if it isnít exciting the rest may never be seen. Make it fun and be enthusiastic. It should stand alone and generate interest for more. It deserves all the thought you would put into a professionally done promotional piece for your customers.

9. Poor presentation. If you have typos and grammatical errors in your business plan, the reader will assume the work you do in your business is sloppy too.

10. Saying 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 ask for any other information they need. Amateurs talk in the business plan about unimportant details because they donít know what they should say and what they shouldnít. Hire a professional editor to reduce the page count and help you emphasize your strengths.

About The Author

Jan B. King is the former President & CEO of Merritt Publishing, one of the 50 largest woman-owned and run businesses in Los Angeles and the author of Business Plans to Game Plans: A Practical System for Turning Strategies into Action (John Wiley & Sons, 2004). She has helped hundreds of small businesses turn their business plans into game plans with her book and her ebooks, The Do-It-Yourself Business Plan Workbook, and The Do-It-Yourself Game Plan Workbook. Visit her site at www.janbking.com for more information.
jan@janbking.com

Marketing >> Small Business Plans  >> Business plan mistakes

 

 

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