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7 Mistakes To Avoid When Writing A Business Plan

Tuesday 9 June, 2009
by Barb Dearing
A business plan guide is a great place to start when you are getting ready to write your first business plan. But we're going to ignore the step-by-step tutorial for a moment and focus on the real world mistakes you need to avoid.
  1. Don't put it off

    Yes, writing a business plan can be a monumental chore. It's easy to procrastinate while you focus on the more exciting processes of your business. Many new business owners will wait until the day before their scheduled meeting with the bank - and then frantically try to write a plan overnight. You can imagine the results.

    Don't wait until you have more time. There will never be more time. You need to clear your calendar for a week and make your business plan a top priority. Or if that isn't feasible, schedule a certain period of time each day to work specifically on planning. No doubt you have heard the old saying: "If you fail to plan, you are planning to fail".
  2. Don't confuse profit with cash flow

    Unless you have an accounting background, you are very likely to define the success of your business in terms of profits. A simple definition of Profit would be Sales minus Expenses equals Profit. But in the business world, profits do not equate to cash. Your profit formula does not take into account the amount of cash you have tied up in production costs for products that have not yet sold, or the customers who still owe you money for sales that have already been made. Your business can look quite "profitable" while your bank account is over-drawn.

    Make sure your business plan includes a table that addresses cash flow. Ideally, you should detail the monthly cash flow for the first two years of the business and annually thereafter.
  3. Don't fall in love with your idea

    Too many business plans blabber on for pages about the "newness" and "uniqueness" of the idea. But the truth is, investors want to invest in people, not ideas. It is only the people who can execute the systems necessary to bring the idea to life.

    Instead of waxing poetically about your business idea, focus your energy, and your reader's eyes, on the ways you plan to implement this great business idea.
  4. Don't succumb to fear and dread

    If you have never written a business plan, the process may loom like Mount Everest. But, like most new challenges, writing a business plan isn't as hard as you have imagined it to be. You aren't writing a doctoral thesis or the next great novel. If you have invested in a business plan guide, use it. You can easily find helpful resources such as books, software programs and templates.

    Remember, you eat an elephant one bite at a time, so start chewing.
  5. Don't over-sell

    Skip the vague and meaningless business phrases such as "best ever", "highest quality" and "unsurpassed customer service". You will lose your reader's interest and respect if you engage in hyperbole that isn't supported by measurable facts. Remember that the objective of a plan is its results, which require tracking and follow-up.

    Focus your goals on specific dates, management responsibilities, budgets, and measurable milestones. Think fewer words and more numbers.
  6. Don't engage in one-size-fits-all

    Business plans can have many different purposes and they should be written to reflect the specific purpose at hand. You may be using your plan to start a business, or just run a business better. Your purpose may be simply to sell an idea for a new business to one particular business partner. Your plan may be intended to secure a small business loan, or it may be needed to secure millions of dollars of venture capital.

    Each of these purposes would require different information, presented in different ways to meet the needs of different readers. Keep a picture of your intended reader firmly in your mind and your business plan will stay focused as well.
  7. Take off the rose coloured glasses

    Optimism is a wonderful resource. Without it, a business owner would find it difficult to summon the energy necessary to launch a new venture. However, this is not the time to engage in unbridled projections. If your company's growth chart is based on an "industry average" of 15% annual growth, you should certainly be prepared to prove that assumption. When in doubt, be less optimistic.

Author Credits

Barb Dearing. Barb is a freelance writer, wife and mom. She occassionally practices yoga when nobody is watching. Reproduced from www.articlesbase.com

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