A business plan is a detailed document that outlines the business objectives and the methods you will adopt to achieve them. It also includes information on your products and services, marketing strategies, and funding. Putting together a business plan helps entrepreneurs and small business owners to fix the business goals, track their progress, and make corrections as the business grows. Business plans help investors to judge the potential of the business and decide whether they should invest in it. It is therefore important to avoid making common mistakes when crafting your business plan:
Unrealistic Financial Projections
One of the biggest mistakes entrepreneurs make when making a business plan is to make impractical financial projections, especially when pitching for investment. Investors and lenders are experienced and can spot unrealistic financial projections. Investors will invariably reject impractical business plans. According to Entrepreneur, it is important not to make assumptions without any basis.
Not Defining the Target Audience
Even though every entrepreneur hopes that the products and services will have universal appeal, in real life, to succeed, they must define specific audiences and target them with products and services that address their pain points. The effectiveness of your business plan will depend on how well you have defined your target audience, customized your products and service, and your marketing strategies to address it. By not targeting specific audiences, you will dilute the impact of your marketing strategy and fail to achieve your goals.
For any business to be successful, owners need to conduct intensive research on various things like the size of the market, the needs of the target audience, and the nature of the competition, the regulatory framework, the technology, and more. It is vital to conduct adequate research with a large enough sample size and over a long time to ensure the conclusions drawn are accurate and reasonable. Many business plan examples have been thrown out for using incorrect or out-of-date information.
Not Focusing On the Competition Adequately
There is hardly ever any new business idea where there is no competition. Even if the idea is revolutionary, there are bound to be ways your target audience is satisfying their needs. When planning to set up a new business, you must focus on the competition, and what gaps are present so you can take advantage of them. Going head to head with established players is unlikely to make sense unless you have sharp differentiators, and it can mean more effort, time, and money to grab market share. Your business plan must identify lucrative niches you can occupy and dominate.
You must take care not to present facts, figures, or theories that are inconsistent or conflicting with each other. For example, you must make sure that if you are quoting figures, they do not differ from one page to the other, or if you are presenting a marketing strategy, the focus should not be different across the document. Investors will spot inconsistencies and inaccuracies and call you out for being careless or unprofessional. One way of avoiding it is to put together a succinct plan that covers all the essential points and review it thoroughly before presenting it.