A business plan is a very important business tool to have as an entrepreneur. Not only does it provide a clear path towards actualizing a business idea, it improves your chances of success and can communicate your idea to investors.
When you write your business plan, avoid making these 7 common mistakes.
1. Unrealistic goals
Some entrepreneurs make the mistake of writing a business plan to impress banks or investors. Your business plan is, first of all, your business plan. It is one place you can be totally, brutally honest with yourself. It’s where you acknowledge your strengths, weaknesses, opportunities and threats (SWOT).
When you set a goal, make it realistic. Then create a detailed plan on how you will achieve it. Your business plan should show how much you expect in revenue. It must also show how you plan to get there.
Setting realistic goals shows that you can actually achieve also lets investors know that you understand what you are getting into. Nobody gives money to someone who is unsure or ill-prepared.
2. Keeping a rough copy
This goes without saying, but it would shock you how many people still keep business plan drafts with stains, typos and everything. Whether you are keeping a business plan for personal use or submitting to investors, make sure your business plan is neat, tidy and well edited with no errors in grammar or calculations. This shows you take your planning process seriously.
3. Lack of strategy
We all want to say something like, “Our ______ firm will be the best in the country.” But that is not a strategy – it’s not even a concept. Your business plan should contain detailed, well-thought-out and careful plan to achieve a specific goal. A strategy is a detailed plan that resolves how you intend to become the best construction company in the country.
4. Lack of purpose
These days, people don’t care about what you do; they care about why you do it. When I look at any business plan, or business for that mater, the first thing I want to understand is “why?” Why is this person doing this? What is their motivation?
Your purpose will keep you going even in the hardest times. It is what people will first consider before doing business with you.
Create a clearly defined objective. State your business purpose. Be completely honest.
5. No personal stake
Your business plan should state your financial commitment to the business. If you are not willing to financially commit to your own company, don’t expect anyone else to..
For example, if you plan to apply for a small business loan, be ready to show your willingness to personally guarantee a loan. If you’re seeking investment from friends and family, the same notion applies. You have to be personally involved. This is the only way someone else would trust you enough to invest in your business.
6. Overlook pitfalls
Investors know there are pitfalls associated with every business. They want to make sure you know those pitfalls too. You cannot overcome something you are not aware exists. When you write your business plan, share details of the challenges you expect and plans to overcome them.
7. Random assumptions
The main purpose of a business plan is to remove as many random variables as possible.
A good plan is never random. For example, never assume market conditions will favor your product because it’s “innovative.” Instead, explain in well-researched detail what market conditions are currently and why you believe they would favor your product at any given time.
These seven mistakes could make the difference between being invited by an investor to pitch your idea or your business plan ending up in the trash can.
This article has been edited.
Samuel Chinedu is the founding editor at nextnaijaentrepreneur.com. He share ideas and information to raise the next generation of brilliant, daring and successful entrepreneurs. Connect with @nextnaijaent on Twitter.