Like anything else we do that’s unfamiliar, when it comes to writing a business plan and trying to avoid business plan mistakes, we don’t know what we don’t know.
Case in point — me. When I wrote my first business plan I made three different mistakes without even knowing it.
Writing a business plan can seem like an overwhelming endeavor. If you aren’t prepared when you sit down to put pen to paper, there are several areas that can trip you up. Fortunately, business plans are one of those things that the more you write them, the easier they get as you build expertise about what’s required.
Having said that, knowing some of the most common business plan mistakes helps ensure the entire process goes smoothly. To help you build a better business plan, let’s look at four common business plan mistakes and how you can avoid them.
Mistake #1: Skipping a Section You Don’t Understand
If you’re new to the experience of drafting a business plan, it’s likely you’re going to find a section or two that you find hard to understand.
This is one business plan mistake I’ve personally made in the past. While your initial instinct may be to just throw a ballpark number in there and carry on with the rest of the plan, that approach can hurt your plan.
It’s natural to not want to pause and figure out something that feels complicated. However, you need to fight through the temptation to skip over the areas you’re not comfortable with; making your business plan as robust and accurate as possible is not only key for securing funding, but it will also help you plan, project, and solidify your strategy. It’s always worth the time to do it right.
Mistake #2: Not Asking for Help
Entrepreneurs are known for being jacks of trades and having many different skills. Because of this, we sometimes struggle with the idea of hiring a professional when we think we could just DIY and save ourselves some money.
But make no mistake about it — everything has a price, and NOT hiring a professional to help you does come at a cost.
You have to consider how much time, effort and stress it’s going to cost you to try and write your business plan yourself. How long will it take you to learn the skills you need to write your business plan, and what other areas needing your attention are you going to sacrifice to find the time?
While spending the money on hiring a professional to help with your business plan may feel unnecessary, it will be worth it. The guidance they can offer combined with helping you avoid business plan mistakes usually makes their fees well worth it in the long run.
Mistake #3: Not Treating the Financials Properly
In your business plan, potential investors want to see numbers rooted in reality and based on solid data. This includes the income statement, cash flow projects, and balance sheet.
Sometimes entrepreneurs make the mistake of glossing over this section completely, only adding minimal detail or plugging in arbitrary numbers just so they have something down on paper.
If you want investors to take your business plan seriously, you need to treat your financials with the utmost care. Take the time to do the required financials for your business plan to build confidence in your company’s viability and forecast.
Mistake #4: Ignoring Glaring Issues Revealed by Your Business Plan
It’s completely normal that as you work on your business plan, you may uncover some gaps in your plans or some other issue with your idea. This happens because as you break down everything in detail, any deficiencies in your plan are easily revealed.
Maybe the market is over-saturated or the price point will not bring a profit, or the idea isn’t solidified. The “what” of the problem isn’t as important as you taking action to address it.
This is an opportunity for you to course-correct, so whatever you do, don’t try to cover it up and just carry on making your plan. One of the primary purposes of your business plan is to identify problems and address them before attempting to put a faulty plan into action.
You may already have way more in your business plan than you need, or, if you are still at the beginning, you may feel stressed about knowing when to stop writing. Now that you know what business plan mistakes to avoid, you can work on adjusting it accordingly and ensure you’re creating the business plan you need to wow your investors.