There are more than a few mistakes that seem to be made in writing business plans. It’s important to remember when writing a business plan that it is a critical document for internal and external use in any business. Unfortunately, too many business owners or managers either never develop an actionable business plan or they take shortcuts. Yes, it takes time to write a sound business plan but, once written, it is usually a simple matter of updating the plan over time to address changes in external and internal factors affecting the business. Some of the most common mistakes made in writing business plans are discussed below.
Common Mistakes Made When Writing a Business Plan
- Failure to understand or define the business concept fully. Too often, entrepreneurs and business owners have a basic understanding of the business concept, but have not really thought through the concept thoroughly enough to sell it to someone else. It is imperative that you have a very thorough understanding of what business you will be in and how you will go to market. If you cannot explain your concept thoroughly and concisely in the business plan, the reader will immediately be turned off and will likely not read further.
- Leaving important pieces of information out. It is amazing how often we read plans that have omitted critical information. It is strongly recommended that once you have completed your initial draft of the document to read it and have 3 to 5 other people who know nothing about the business read it as well. Solicit their feedback and ask them if it is clear and if it provides sufficient information. Use their feedback as well as your own observations about the document to add information that will clarify or further explain important points.
- Including too much information and being redundant. Most readers do not want to read a long document that includes information that is essentially irrelevant to the business. And they do not want to read the same information repeatedly. Be concise, be clear and be pertinent. Avoid being overly wordy.
- Failure to be realistic. It is absolutely mind boggling the fantasies that an entrepreneur or business owner can dream up when thinking about their business concept. In defining the business concept, estimating market share, and creating the underlying assumptions around which the important financial projections are created, it is imperative that a sense of reality be present. Thinking with one’s heart rather than their head can have an adverse effect on ensuring the business plan is based on reality. Any astute reader will see though a plan based on anything other than realistic assumptions and concepts.
- Assuming that your concept is so good that the business plan can be sloppily formatted. Some business plans stand no chance of being taken seriously simply because they were so poorly laid out and formatted. While looks aren’t everything, having a professional looking business plan is important. Sloppy business plans will make a lender, for example, skeptical about how the business will be run.
- Assuming that looks are everything. Some people believe they can make a business plan look so appealing in terms of format and design that they can have a poorly written document. Nothing could be further from the truth. We have all seen business plans that looked beautiful, but quite frankly stunk in terms of content and concept. The reader is most interested in what you say and, to some extent, how you say it.
- Taking shortcuts. Some also believe that they can leave out important sections of the business plan entirely and simply address those sections verbally. The problem with that line of reasoning is that leaving important information out will probably sink any chance of getting an invitation to present the plan verbally. Stay focused on the reader and what he/she wants to know. If important information is left out, the reader will likely stop reading or determine that the writer does not understand the business well enough to describe it or is too lazy to write a complete business plan. In all cases, the plan is probably doomed.
- Underselling or overselling. Too many writers of business plans attempt to either oversell their business concept or they undersell it. It is important to remember that you will be trying to get the reader(s) excited about your business. But overselling it by writing too much hype will be met with disdain by the astute reader or financing source. Keep in mind that most of the people who will be reading your business plan document have read many of them and they are keenly aware when they are being oversold. Try to sell your business concept by creating a feeling with the reader that the underlying assumptions used to arrive at market and financial projections are sound and reasonable and use language that creates excitement without overly hyping the concept. Keep the verbiage professional, but weave a sense of enthusiasm into the document.
Summary
Business plans are used for many purposes including supporting the strategic plan for the business and providing clear direction for employees and providing a clear blueprint for success for those who might be potential investors or lenders to the business. The business plan generally accompanies a good strategic plan and succession plan for a business forming a clear direction and results-based focus for those leading and working for the business. In summary, take your time when developing a business plan, create sound assumptions, provide clear and easy to understand content, and do not take shortcuts.
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