The Dirty Dozen Business Plan Mistakes
How To Ruin A Business Plan In 12 Easy Lessons
You are writing a business plan because you want to achieve something.
You want to get a loan. You are applying for a grant. You are looking for investors. You want to buy a business. You want to sell a business
In any business plan here are twelve things to avoid, if you want to get what you want.
- Being all things to all people.
What is the purpose of the plan?
Who is the audience for the plan
Whose perspective are you taking?
- Not focusing on the competition.
Playing down the competition.
“We have no competition”.
No competitive analysis
- Unfounded and unrealistic assumptions
The “hockey stick” growth curve
Industry size ill-defined
Market size too optimistic
- Inadequate research
Weak market research
Failure to demonstrate demand
Lack of sources or citations
- No risk analysis
Hiding your weaknesses
Lack of experience
Claims of no risk
Poor mitigation strategies
- Unrealistic financial projections
Financials do not make sense
Assumptions not listed
Essential expenses omitted
- No plan of how to get there
How will you make it happen?
What is your route to market?
Not knowing your distribution channels
- Business plan inconsistencies
“Logic bombs” in the plan
No plan to manage volume
- Top-down financial projections
1% of $10 Billion Market
Assume payroll at 50% of sales
Comparison to branches of major chains
- Lack of a viable opportunity
No evidence of demand
If I build it, they will come
A solution looking for a problem
- Not understanding cash flows
Cash is the lifeblood of business
Profits are not the same as cash flow
Timing, timing, timing
- Not defining your target market
Everybody needs our product
Valid value proposition
Geographic, demographic or psychographic
This is one of a series of blog posts about common mistakes found in business plans. Remember, you may be writing your first business plan, but the person reading it has probably seen hundreds. You want the reader to say “Yes” to your business plan, so don’t make it easy for them to say “No”.