Nov 7, 2013

5 Most Common – and Avoidable – Business Plan Mistakes

Writing a business plan is very much like constructing a house; it involves developing and building a great many parts, all of which serve different functions, and must work together while being mutually supportive and well-balanced. If one part of the house isn’t strong enough, it could cause the whole thing to collapse. If one room is larger than it needs to be, it feels awkward and unappealing. In general, any number of mistakes, whether a product of carelessness or ignorance, can turn a would-be beautiful house into something no one would want to buy – and something that reflects quite poorly on the team who built it. So how are most people ruining otherwise solid business plans? Here’s the 5 most common blunders: Being boring Let’s just tackle this one straight away: a boring business plan will not work. It just won’t. Whether you’re trying to appeal to investors or woo some hot super-candidate to join your team, you have to wow them a little. Undoubtedly, you need to have a truly solid plan otherwise, but if you aren’t communicating it with great energy in an aesthetically pleasing package, you aren’t going to have to worry about your audience’s opinion of your market analysis – because they will be asleep. Or thinking about donuts. Or whatever. Being all flash and no bang On the other hand, if you’re all show and no substance, anyone with a brain (a group that clearly won’t include you) is going to see right through it. Incidentally, this attempt to not be boring can end up being a whole other kind of boring. Making unreasonably big promises It makes perfect sense to want your business plan to inspire confidence in your prowess as a business owner and excitement about the potential of your endeavor. But if your business plan includes an overblown estimate of your ability to penetrate your market, or really any unfounded, lofty guarantees, people are unlikely to buy it, and will think less of you as a result. Optimistic, courageous honesty is the best sweet spot to aim for. Being redundant It’s all too easy to unconsciously (we’re going to give you the benefit of the doubt and assume you’re not doing this on purpose although some of you definitely are) end up repeated certain words and phrases throughout your business plan. They’re likely words or sentences that perfectly describe some aspect of your plan, some part of your company, or your market that you really want to communicate to your audience. We get it. But, um, don’t do it. Use the business plan to explain the things that make those buzzwords true, and then employ them at the end to really drive home the point. Pretending you have no competition It’s a big world with lots of people doing lots of things (hey, big general statement!) The point is, there are essentially no untapped industries. Even if your company is in support of a brand new product, it’s probably not creating a new need – how did people fill that need before? What companies and products served them before you and your genius new product came along? There’s your competition. No new business is without competitors, and claiming as much in your business plan either communicates to potential investors that you are being dishonest, which entirely undermines your credibility and will make exactly no one want to back you, or that you don’t know who your competition is. That’s a pretty glaring, basic thing to not know. Pulling the whole “we have no competitors!” angle is one of the biggest ways new business owners try to make themselves look innovative and ahead of the game, but really just make themselves appear tremendously inexperienced (and – we’re gonna say it – a little insecure.)