Sharp Business Plans

The Dirty Dozen Business Plan Mistakes

Posted in Blog, Startups

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”.