A business plan is an important aspect of your start-up because it acts as both the blueprint and roadmap for your company. It provides the basis for future decisions like sharing with management to help with strategy or to present to investors for funding.
However, despite its importance most people make mistakes with their business plans and it ends up misrepresenting your business to the detriment of your success. Here are five common mistakes to avoid in your business plan.
#1. You don’t explain what’s next
Most business plans lack one key thing, they don’t explain what’s coming next. Understand that concluding on what your expectations of the business are in both the short and medium term is just as important as setting the context at the outset by identifying your audience.
A good way to make a better business plan is to present a view on strategy so you can discuss it with your team if they are your audience. And if the plan is for an investor, you want to articulate funding requirements and have a really good deal structure for them to consider.
#2. You don’t write with your audience in mind
You need to write your business plan for a specific audience. Keep in mind who you’re targeting and don’t make generalizations. Also don’t write one business plan for all your target audiences as it might have to be tweaked depending on the demographic you wish to appeal to. Be clear from the beginning know who you’re writing for and structure the plan with the questions they will likely ask.
#3. You beat around the bush
Even though no one knows your business better than you, you’re likely to beat around the bush and come off as just showing off your knowledge rather than adding value for the reader. This puts off your readers and detracts you from your most relevant points.
Try to write as much as is relevant and determine which section you need to include in the plan by acknowledging your readers and audience.
#4.You can’t articulate your market
A lot of entrepreneurs fill up their market section with vaguely relevant material from the internet. It is never a good idea to be vague in business plans. Being succinct and specific is required. Identify who and what is relevant and provide a well thought through market plan.
#5. You don’t explain your financials
Perhaps because of the perceived complexity and unfamiliarity, many entrepreneurs are uncertain about the financial section of their business plan. You need to clearly explain all aspects in your financials so that your business plan seems transparent and accurate.
For example, if you have made an assumption of 20 percent revenue growth and 70 percent gross profit margin, you need to explain the basis of your assumption. Also explain in simple language what the numbers mean instead of just mechanically stating numbers. This allows for tangible dialogue with your audience.
A business plan evolves with the business and changes are usually made as the business goes through challenges and successes. In shorter words, there’s never a final plan. However, noting the common mistakes above will go a long way in ensuring you have a proper business plan built on strong foundations and one that contributes to the success of your business.