5 mistakes to avoid in your business plan
Crafting a business plan requires meticulous planning, but there are also mistakes you should be aware of when preparing to put together your business plan.
In order to avoid mistakes, we’ve put together five of the main mistakes to avoid – whether this is your first go at a business plan or even if you’ve already done one before.
- 1. Skip the market research
- 2. Guess the cost of your overheads
- 3. Make an unrealistic forecast
- 4. Overlook the professional aspect of your document
- 5. Do not show the business plan to anyone
1. Skip the market research
Market research can be a long process and requires a lot of work on the entrepreneur’s part to collect the relevant information. Many entrepreneurs think that it’s best to avoid it completely and instead get a rough idea of what the market is like to start their business.
Don’t make that first mistake. Don’t skip the market research! Not only will this important step allow you to have a better understanding of the sector you’re setting foot in, but it will also give you the necessary tools to compare your project to competitors and make sure you’re following the right path.
Detailed market research will be an essential part of your business plan. It will add credibility to your project when you’ll be presenting it to the bank or to potential investors.
2. Guess the cost of your overheads
You are probably aware that overheads are the main costs when it comes to setting up a new business, mainly because they will allow it to operate on a daily basis. It’s easy to think you can roughly estimate the cost of your overheads.
This is where you should not rely on your personal knowledge, and make sure you have precise information by asking potential suppliers for quotes.
These quotes will be included in your business plan to convince potential investors that you have thoroughly researched your project and that the risks of not having enough cash flow to support your overheads will be limited.
3. Make an unrealistic forecast
It is only natural to have doubts when putting together your financial forecast or any part of your business plan, especially considering that you will never know for sure how much your business will earn until it has actually launched.
You should, however, resist the temptation of putting together unrealistic estimations which could be abnormally high.
If you’re unsure, it’s better to lower your expectations. Of course, making the relevant calculations beforehand will help, and that’s why it matters. Putting together a financial forecast in your business plan should be as accurate as possible, by taking into account different factors, including your capacity and your market research results.
4. Overlook the professional aspect of your document
If you’re more interested in the business side than the writing side, it is possible that you will neglect how thorough you need to be when putting together your business plan.
Writing a business plan doesn’t mean having a simple layout of your objectives, but on the contrary, to have a clear and detailed outline of your goal and objectives, making sure every aspect of the business has been highlighted.
Many people advise organising your business plan between sections and subsections, supporting your claims with documents such as maps, quotes and photos. You should also make sure your business plan does not have any grammatical or spelling errors.
Having a professional-looking document means your business plan will be investor-ready for when you present your project.
5. Do not show the business plan to anyone
“Until the project is finished, I don’t want to show it. They can steal my idea.” Sharing the business plan helps us to have another view of the situation and to be able to address different points of view. Perhaps by studying your plan so much and seeing it constantly, you’ll miss some details that can help you improve. Take the ideas that come from outside, reflect on them and decide what part of these can serve you to make your business plan professional.