BUSINESS PLAN BLUNDERS:
7 Ways to Avoid Shooting Yourself in the Foot
Okay, you’re finally writing your business plan. But will it help you secure the funding you need? Will it be your road map to success, helping you to build a successful business?
Most entrepreneurs write their business plans with one goal in mind: to raise money. Even so, a business plan is a double-edged sword. While it allows you to introduce and sell your business to the reader, it also gives the reader the opportunity to say “No, thanks.”
Don’t blow your big chance. Now more than ever, you only get one chance to make a good first impression. Below are 7 mistakes to avoid—7 surefire ways to shoot yourself in the foot. (Note: Even if you're writing your business plan for the purpose of developing an operating blueprint, it's just as important that you avoid these 7 mistakes.)
1. Too much jargon. If readers can’t understand what you’re saying, they won’t buy in. Another caution: Go easy on the latest buzzwords. If your business plan is laden with the latest “sexy” buzzwords, readers’ antennae go up—are you using fancy words to hide a lack of substance? Better to write a straightforward, easy-to-understand business plan.
2. Good idea, but customers won’t pay for it. You may have a good idea, but that’s no guarantee that customers are willing to pay for it. The critical question to ask is, “What problem am I solving for paying customers?”
3. Too many generalizations. Discuss your specific solution(s) to solve the problem. Support your statements. Too often business plans are filled with superlatives, generalizations and over-the-top optimism—guaranteed red flags.
4. How are you going to sell it? Too many entrepreneurs fall into the trap of thinking, “If I build it, they will come.” You need to explain how you’re going to reach your target customers to sell your product or service.
5. Unrealistic assumptions. A good plan has realistic assumptions. A seasoned investor can spot unrealistic assumptions a mile away. And even if you’re self-funding, what good will it do you to be unrealistic? Another caution: Your numbers need to support your story. You can’t talk about your elaborate marketing campaign without allocating appropriate funds in your projected financials!
6. Competitive position can’t be defended. You have a great idea. But if it’s successful and easy to copy, what good is that? Being first is no guarantee that you will (or can) maintain your market share.
7. You wrote your executive summary first. How can you summarize what you haven’t yet written? Writing a business plan is a process, and there are no shortcuts. Inevitably, your business will evolve and take shape as you think through all the issues, big and small. This evolution is a critical part of the plan writing process, and the results ultimately show in your executive summary. You need to write it last and write it well—it's the hook that will get you in the door and entice an investor to look deeper.