While each small business is different, many prosperous ones have a similar foundation: a business plan. Writing and researching a business plan is a crucial step in outlining the course your company will take and is essential to obtaining funding for startup fees or expansion. And mistakes are part of the journey.
However, there are some common mistakes companies make while whipping up a business plan. You can save energy by avoiding these mistakes.
Impractical goals
If you’re not willing, to be honest with yourself, ask probing questions, and conduct thorough research, this can occur on a variety of levels. Your business plan must take into account market realities, financial realities, and the entrepreneurial environment; it cannot represent the best-case scenario or how you hope things will turn out. Be realistic.
Be careful not to overstate or pad your expected future earnings can potentially get into trouble like going into default or bankruptcy. It can also create problems if you want to get a loan from the bank in the future.
Even if your product is distinctive, your target market still has options for how to spend their money. You need to think about how you’ll convince your target market to pay you money.
Without spending time and effort on current market research to fully comprehend market trends, client interest, rival performance, and other aspects of product or service viability, no business plan is complete.
Poor summary
According to RISBDC business counselor Josh Daly, a lender will read the executive summary of your business plan and “give it the sniff test, then the gut test.” Depending on what their gut tells them, the lender may choose to read on or stop. So it’s important to pay attention to the executive summary.
It should explain why your company is viable in a few concise terms such that someone without a background in business can grasp it. Daly advises using 1-3 phrases for each of your company history, client base, market, competition, qualifications, and team. Your audience should be persuaded to continue reading with a succinct summary that fits into two pages or less.
Prospective lenders should be made aware of how much money you intend to borrow and how it will be used right away if your plan is centered on acquiring funding.
Too lengthy
A brief and well-structured business plan for the majority of small firms should be 5–10 pages long. When necessary, an engaging business plan uses visuals to prevent using unnecessary words when a graph, chart, or map would be more successful.
An appendix can contain further supporting financial forecasts or research data. Plans that are much lengthier run the danger of losing their audience before they are really read and may not provide additional or better information.
Small mistakes
Typos, grammatical mistakes, and improper formatting are all easily avoidable problems that detract from the impact of your introduction. Your business plan will represent you, so it needs to appear professional.
Check your spelling. Read your plan again. Get plenty of rest and read it once again. After that, even if you’re a fantastic writer and a stickler for details, have someone else review it for errors. Never undervalue the worth of a set of new eyes.
You don’t have to go through it alone. Firms like Turnkey Tech Solutions also help budding entrepreneurs in creating business plans.