With over 543,000 new businesses launching every single month, getting your business off the ground is becoming harder than ever. Lack of demand, inexperienced management and limited financial backing are just a few of the hurdles newly launched businesses might face, and with only 40% of start-ups managing to circumvent these difficulties, it’s easy to see why entrepreneurs might feel defeated.
A great business plan is one of your most important tools – and can pave the way for financial backing from investors which will open up new doors for your business. And while you may have a solid idea of what to put in your business plan, knowing what not to put in can be just as important.
Let’s take a look at the most common mistakes entrepreneurs make when it comes to their business plan, and why they’re best avoided.
While setting your sights high is undoubtedly a good thing, openly showing off to banks or investors is unlikely to go down well. Set yourself realistic goals and create a detailed plan, with time frames based on previous experience. Remember that any investor will be able to see if you have just plucked numbers from the air, and they are much more likely to trust someone who sets realistic goals and acknowledges the hurdles they might face.
Your business plan should be direct, to the point and detailed. Avoid vague statements and business jargon that serves no other purpose than to make you sound clever. Avoid phrases that sound as though they’ve come straight from BBC’s The Apprentice, as delusions of grandeur are easy to pick up onand are a tell-tale sign of inexperience.
Ignoring Cash Flow
Cash flow is one of the first things investors will look at, so be as detailed as possible and remember to take into account a lot more than just general costs and revenue. Talk about milestones, dates, responsibilities and deadlines in detail to allow investors to see how and when you will achieve your first goal. Details are extremely important and a business plan that scrimps on important details is unlikely to have much success.
Lack of Research
Research the market, research your target audience, research the best business bank account and research anyone and everyone who is/ has embarked on a similar venture. Neglecting your research is unlikely to get you far. Learn as much as you can about the investor or bank you are pitching too and tailor your business plan to suit their investing habits if necessary.
Ignoring the Competition
Pretending the competition doesn’t exist won’t fool investors, and they’ll be far more likely to take your business plan seriously if you acknowledge that there is competition out there – which there almost certainly is. In your business plan, show that you know who your direct competitors are, as well as your indirect rivals. Behaving as though you have no competition is a red flag to investors, and is a sure sign that the entrepreneur hasn’t done their research.
A Complex Layout
While a good layout can make your business plan look more professional, try not to confuse your potential investors with multiple fonts, colours or a confusing structure. Keep the business plan as simple and professional as you can, and ensure the plan is easy to read. Give it to a friend or family member to read before you send it off in order to get a fresh set of eyes on the structure.
Entrepreneurs can sometimes get carried away with excitement and think that proper editing doesn’t matter. After all, investors will be able to overlook the odd spelling mistake if it’s an incredible business opportunity, right? Wrong! Sloppy grammar and spelling mistakes will make you less credible, and will almost certainly lessen your chances of progressing. Proofread your work yourself, and then ask someone else to do it. Many people find it helpful to leave a few days between finishing the plan and going over it with a fine tooth comb.
There’s little more daunting for an entrepreneur than pitching your business idea to investors, and with financial backing one of the best ways to get your start-up off the ground, your business plan requires some serious thought. You could have a rock solid business idea, but allowing just one of these mistakes to slip through into your business plan can have huge consequences. Remember both what to include and what not to include, and your business could be one of the 40% that thrives.