Top Business Plan Mistakes To Avoid

Having a solid business plan is your first step on the path to entrepreneurial success. Don’t jeopardise your chances by making these common errors

Business plans don’t sell themselves to investors, people do. Executive coach Refilwe Khumalo says a business plan helps you to analyse and articulate what your business does, your business opportunities and your immediate and long-term actions and resources required for growth.

She adds that a poorly written business plan indicates a lack of pride, focus and commitment to your business. “To demonstrate that you take your business seriously, it’s crucial that you invest plenty of time in creating your business plan, and if necessary, get a professional to assist you, so can avoid committing common mistakes.”

Lack of research
When writing your business plan, avoid assumptions and going on gut feel. You need to give an overview of your business and your immediate and long-term actions plans. Ensure that you do sufficient research to demonstrate the need for your product or service and the pattern of demand (for example, does your product sell well at specific times of a month or year).

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Show that you understand the market size, have researched different pricing models, compared supplier costs and service value adds.

Little or no competitor analysis
Entrepreneurs who believe they have an innovative product or service are inclined to believe that their product is unique and assume that they have little or no competition. This is a serious oversight as no business, product or service can claim to have no competition.

Do thorough research to determine who your competitors are. Competition arises not only from companies who offer the same product or service, but those who offer similar goods or compete for the same type of client.

Shows no risks 
Avoid the mistake of claiming that you have no risk. Any sensible entrepreneur knows that there is always risk. Show that you have done your research on how you plan to minimise or mitigate your risks.

Contains unrealistic projections
It’s critical to do your homework on numbers because failure to do so is a barrier to winning the buy-in of investors. Ensure that your business plan indicates how much it will cost you to produce your product or develop your service, then calculate how much you could sell the product or service for and how much the profit would be per unit on the cost of sale. Also do not forget to filter in your cash flow.

Is too brief or too detailed
A tricky one, but you must find a balance as your business plan is an important document that needs to show detail while not being too lengthy or include unnecessary and vague information. A solid plan should include an executive summary, company overview, details about your products or services, target market, marketing and sales plan, milestones and metrics, management team and financial plan.

Tries to be all things to all people
In your search for funding you may encounter different kinds of investors so don’t make the mistake of approaching different investors with one plan. Rather tailor and smartly target your business plan to resonate with each investor before going to pitch. The rule of thumb is to keep the critical and necessary parts of the plan the same and review any industry jargon, particularly when pitching to investors that don’t operate in your industry.

Not knowing your audience

The tone and style of your business plan should be appropriate for the audience you are writing it for. Write it in a way that speaks to investors and steer clear of technical jargon, especially if the investors are not technical specialists in your market.

Source: Destinyconnect

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