7 Fatal Business Plan Mistakes

Business plans are the blueprint for your business venture but often can be fraught with mistakes. These mistakes can prove to be very costly – especially if you are a start up company looking for investment funds. The best way to avoid errors in your business plan is to recognize potential problems areas.

These can include:

  1. Unrealistic Financial Projections.
    One of the biggest mistakes made in business plans are unrealistic financial projections. When you are compiling your projections remember to be conservative in your estimates and base figures on solid research as opposed to speculation.

    A good rule of thumb is to develop your financial projections and then cut them by a quarter or half and put those figures in your business plan. Remember you may be required to defend your financials so make sure they are realistic, conservative and based on more than assumptions.

  2. Inadequate Marketing Plan.
    If you haven’t defined who your target market is then your business will more than likely fail and you will find it hard to gain investment. Identifying clearly your target market – who is going to buy your product and why they are going to buy it is a fundamental aspect of your marketing plan and the overall business plan.

  3. Inadequate Research.
    All claims and statements in your business plan must be double-checked and substantiated. Make sure your research into market trends, potential market share, growth patterns, financials and other areas is up to date and accurate.

  4. Not Paying Attention to Competition.
    Don’t state that there is no competition or that competition is inadequate without documenting the real threats to your business. Again you need to be realistic and potential investors will expect to see a full analysis of the competition and how you are going to enter and fit into the market.

  5. Hyped Up Phrases.
    Do not use hyped up phrases or buzz words can make an otherwise professional business plan weak.

  6. Too Long in Length.
    Potential investors will no doubt be looking at other business ventures to invest in. If you are going to angel investors they will have dozens if not hundreds of business plans to go through. Do not make your business plan too long in length – try to strike a balance between covering all aspects of the business plan accurately in a concise manner.

  7. Presentation.
    Remember that your business plan is a formal document and more essentially, a reflection on you and your capabilities. Make it look professional and have another party to proof read the document and check for spelling and grammatical mistakes.

© 2005 StartRunGrow

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