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.

  1. 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?
  2. Not focusing on the competition.
    Playing down the competition.
    “We have no competition”.
    No competitive analysis
  3. Unfounded and unrealistic assumptions
    Overhyped
    Revenues overestimated
    The “hockey stick” growth curve
    Industry size ill-defined
    Market size too optimistic
  4. Inadequate research
    Weak market research
    Failure to demonstrate demand
    Lack of sources or citations
  5. No risk analysis
    Hiding your weaknesses
    Lack of experience
    Claims of no risk
    Poor mitigation strategies
  6. Unrealistic financial projections
    Financials do not make sense
    Assumptions not listed
    Essential expenses omitted
  7. No plan of how to get there
    How will you make it happen?
    What is your route to market?
    Not knowing your distribution channels
  8. Business plan inconsistencies
    “Logic bombs” in the plan
    Timing issues
    No plan to manage volume
  9. Top-down financial projections
    1% of $10 Billion Market
    Assume payroll at 50% of sales
    Comparison to branches of major chains
  10. Lack of a viable opportunity
    No evidence of demand
    If I build it, they will come
    A solution looking for a problem
  11. Not understanding cash flows
    Cash is the lifeblood of business
    Profits are not the same as cash flow
    Timing, timing, timing
  12. 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”.