There are a lot of steps to take when launching a new business or embarking on a new product venture, but writing your business plan is probably one of the most important.
However, there are many common missteps that can occur when putting together a business plan. Number one on the list is the biggest error you can make: thinking you don’t need a formal business plan at all. This is often the mindset when a business owner isn’t seeking outside investment. But a business plan does more than attract investment. The business planning process itself will help you determine if your great idea is truly a viable business. It’s the single most important step you will take in becoming an entrepreneur.
Here are five more typical–but avoidable–errors that harm the process:
1. Failing to acknowledge competition. In your pursuit to show your business idea in the best possible light to investors, it can be easy to gloss over the competition. But that would be doing yourself a disservice. One of the purposes of your business plan is to do the necessary research to determine if your business idea can be transformed into a viable business. Not digging deeply enough when researching competitors will make investors wary of your ability to succeed.
2. Being amateurish. It may sound like one of the least important things to worry about, but how well your plan is written and how it is presented in final printed form are important. You don’t want an important investor to get a few pages into your plan and start to doze off or find it riddled with grammatical errors. Unless you are a professional writer, invest in a professional business plan writer or consultant. Likewise, an eye-catching, well-designed logo for your new business gracing the cover of your business plan will give a professional finish.
3. Being inconsistent. Business plans con be complicated. It is common to rewrite some portions and not others. But be sure to read the final version several times over, enlisting friends or trusted colleagues to review it as well, to avoid any errors or inconsistencies. Don’t make a financial assumption in one section of your plan, then turn around and contradict it later in the document.
4. Too much hype. You might think your business idea is the next great thing, but you need to back up that kind of enthusiasm with hard research, not a bunch of hype and hyperbole. Peppering your business plan with too many meaningless superlatives like “greatest” and “incredible” doesn’t add anything of substance. Instead, rely on the thoroughness of your market research and analysis to “wow” readers.
5. Poor quality research. Doing thorough research and analysis is not something you can fake. An investor will immediately identify “fluff” in place of facts. Again, if this is not your forte, hire a consultant to provide some assistance based on your knowledge and experience.
There are plenty of land mines to avoid as you go through one of the most important steps for launching a business. These are just a few of the mistakes to avoid in bringing your plan to fruition.