Common Errors in Business Planning
We’ve dug into this a little bit but let’s pull back the curtains and shed some light on the confusion that hinders people from writing a killer business plan. Let’s go a little deeper into the common errors and mistakes you will may make.
1. Lean Not Long
It’s not a novel, but you are telling a story, just a short one. We’ve gone over this multiple times and I’ll keep hitting you in the head with the hammer of knowledge until it snaps. Most people skim everything they read, and investors are no different. In fact, they are usually on a tight schedule, so they are more likely to skim even more.
That’s why we have been focusing on the lean beautiful business plan, so that you can tactically acknowledge specific talking points.
You can make your business plan 20 pages and cover every piece of information you can cram into it, but then you’re going to have to wade through information to sell the point that needs to be sold.
2. Know your audience
If you try to please everyone, you will please no one. That’s why you must know your customer and what they need. Remember all of that time and money you spent on research, don’t forget to utilize it in your business plan.
3. Reliable Research You need to have verified sources for your information. That means a tweet, a facebook post, or a meme are not valid sources.
You always want to verify the sources of information provided during your market research. You want to have someone fact check any of the research you’re going to be relying on when you create your business plan.
Outdated or incorrect information could tank your entire business plan. Not only could this make an investor less likely to invest in your company, it could also point you in the wrong direction.
If you go down the wrong path it’s going to cost you time and money. Everyone makes mistakes and that’s why you need to have all of the information in your business plan double checked.
4. Don’t overestimate your companies worth
One of the most common business plan mistakes is overestimating what your company is worth. If you cannot explain how you arrived at your company’s value, then you will never be taken seriously.
You also don’t want to go overboard on your description of your business. Even if you think you have a million dollar idea, it won’t matter if you can’t back it up. Don’t talk about how and why your business is so great, this isn’t a Facebook post.
You need to provide the facts, and that alone will prove what the worth of your business really is.
You want to showcase the best qualities of your company without lying about the weaker points. You need to know your weaknesses because no company is perfect. You don’t want your lender to pick up on a weak point of your business plan, and not have a response for them.
The best way to address these issues without shining a blinding spotlight on them is to write a plan of action on how you are going to overcome the obstacles in your way. Don’t be the guy
who walks in thinking he has a million-dollar company and that he will wow the lenders without any facts, or you will be the guy walking out with his wallet empty.
5. Know your competition
If you don’t know who your competition is, then you probably don’t know who you’re selling to. Whatever product or service you provide, you’re going to have competition. Everyone thinks they can dominate their sector with a unique idea that no ones ever seen before.
You need to know exactly who your competition is so that you can make sure there is room in the market for you. Imagine if you had started a food truck business. Depending on the area you could face a lot of issues.
You don’t want to park your food truck next to 5 other trucks that similar food and are already integrated into that neighborhood. On the other side of that you don’t want to set up a truck in the middle of Alaska.
That’s where your research comes in. Let’s say you had done the research before you bought everything you needed to run a food truck.
You noticed that while there were numerous trucks in your area, there were a few areas that had heavy foot traffic and customers that have a limited amount of time, and you set up there.
This is the same problem your business is facing, if you don’t know the best way and location to serve your customers. Just like with the food truck, you need to know exactly where you’re going to operate your business.
With online companies it’s the exact same concept, if you don’t know what platforms your target customers use daily, you could be burning money on advertising that never reaches the people who would actually buy your product or use your services.
6. Oversharing is not your friend
Imagine that you were interested in investing in a company, and then in comes this guy with a dolly just to move his monstrosity of a business plan.
Okay so it’s not that big, but you get the point,when it comes to your business plan size does matter.
Most experts say that anything over 100 pages is too much, I strongly disagree with this. In my opinion anything over 50 pages is way too much. See if you can trim your fat business plan down to a lean 20 – 30 pages.
That way you’re not putting your investors to sleep as they try to make it through the business plan equivalent of Moby Dick.
7. Don’t be Inconsistent
You want one simple “call to action”, which is just a fancy way of saying stick to one damn point. You don’t want to flip flop between target markets, stick to the one market your most likely to succeed in.
Check all your statistics and numbers, you don’t want to have two statistics that contradict each other. You don’t want to be in the middle of your meeting and realize that your statistics that have presented are dead wrong.
This is especially important if you have a lot of different people contributing to your business plan, then you need to double check their work and make sure it is consistent with your vision.
8. Hiring an Editor
So you finished your plan, and all of the facts are correct. It’s lean and dynamic, and you love everything about it, but did you have someone else proofread and edit it.
Hiring someone from outside of your company to look it over for spelling issues and poor grammar is worth every penny you will spend. It’s not expensive and it’s necessary to have fresh eyes look over your plan.
You’ve probably written up multiple drafts, cutting out sections in one place and adding more content in another. You might think you know your business plan inside and out, and this might be totally true, but you’re way too invested to notice every little mistake.
Even if you hire a professional writer to write the content for your business plan, you are still going to want to hire a proofreader. Even professional writers get too invested in how they are going to represent your company in the best way.
It’s worth having someone who is not invested in your plan look it over.You want to always provide your lenders with a clean and consistent business plan, and if you followed all of these steps then that’s exactly what you’re going to do.