Developing your business plan is one of the first steps in gaining clarity for your business venture vision. When writing a business plan, you will be faced with questions of what should you include or exclude, or what to focus on and what to avoid. 

To prevent you from making the common mistakes every starting entrepreneur makes when writing a business plan, here are the Do’s and Don’ts of writing a business plan. 

When Preparing Your Business Plan, These Are Must Do's

Involve Your Entire Management Team

It is essential when preparing your business plan to have your full management team involved. Everyone has a say and a view. Work together as a team and you will arrive at the greater solution. 

Make Your Plan Logical, Comprehensive, Readable, and Keep it Short!

You business plan is going to be read by others including potential investors, venture capitalist, and the rest of management. Keep away from writing a book and focus on the clear points and overall objective. 

Make your plan easy to read and understandable. Others will have to assist executing that plan as well. A successful plan is a simple plan. 

K.I.S.S = Keep It Simple Stupid

Spend the Time & Money Developing Your Business Plan

Show the commitment and put in the effort to create a solid plan. Utilize assistance to create your plan if needed. There are great tools and templates out there to get you started.

Articulate the critical risks, assumptions, and how your business will tolerate these

Know your weaknesses and areas that your company will be exposed. It’s essential to know where your gaps are ahead of time being proactive instead of learning after your competition has overcome your market. 

This is also a key bonus when venture capitalist and investors are looking for possible areas of exposure.

Disclose any current issues and current problems with your business

Similar to above point except focused on any internal issues or potential problems your business may have. Know these and be prepared to work through them. Identify possible approaches to overcome your challenges.

Identify Areas of Possible Financing

Proactively identify every area you can find financing for your business. Not every opportunity may turn out with cash. Plan that it will take longer than you think to get all of the money needed for your business. The fund raising process will be much harder than you ever thought it will be.

Spell Out The Opportunity For Investors

Create a section of your business plan to include the benefits for outside investors. Highlight the total ownership available to them and outline the overall deal. Make it easy for investors to see the opportunity that exists for them. This should help you with finding additional investment capital for your business.

Be Creative, Capture Attention

Don’t create a business plan like everyone else. If you want to be the 1% that standout, you cannot be like the 99% of business plans that investors come across every day. Make your business a purple cow and stand out of the crowd.

The Plan is Not the Business - Take Action and Start The Business!

As entrepreneurs we can all get lost in our minds and dreams, but an idea is worthless if you do not implement. Take the initiative and get your business started. You will learn more in just a few months of actively working in your business instead of working on your business.

This will save you tremendous amounts of time an effort when developing your business plan as you will now have had actual experience instead of ideas and concepts that haven’t been tested.

If Customers are Coming and Orders are Flowing, Delay the Business Plan

If your able to begin cash flowing your business before a full business plan can be created, that is great! Don’t work on the business, work in the business to get is going. A business is not a business if you cannot cashflow!

You can always pick up writing the business plan when orders and sales begin to slow down.

Taylor Your Business Plan to Your Target Investor Group

Similar to writing a resume for a specific job, write your business plan to appeal to your target investor group. Taylor the business plan to read towards their interest, understanding, and typical language used. This will make it much easier for your target investors to connect and understand all details in their mindset.

Potential Investors To Target:

  • Angel Investors
  • Venture Capitalists
  • Banks
  • Leasing Companies
  • Government Funding

Be Realistic with Market and Sales Projections

It is great to think you have no competition or that everyone will want your product, but that is not always the case. Use detailed market data to show the opportunities, drive the spreadsheets, and pin point the bottom line.

Anyone can fluff up their numbers, but that will show through when you cannot hit your expected results.

When Preparing Your Business Plan Avoid making these mistakes

Have Unnamed Individuals Appointed to Management

Invisible friends do not produce results! Same goes with your management team. When preparing your business plan, make sure all management is clearly identified in advance. Include resumes or profile highlights applicable to your business.

Adding someone who will join you later is no guarantee they are part of the company. They could come up with a better option and never actually join you. Your management appointments must be committed in stone.

Make ambiguous, vague, or unsubstantiated statements

Avoid putting anything on your business plan that you cannot backup with actual data. Stay away from estimated sales figures that your team is unable to produce. Prevent yourself from failure by knowing your numbers and understanding what you can do and what you cannot do! It will save you from a tremendous headache down the road.

Use Jargon That Only An Expert Can Understand

Not everyone is an industry expert. Stay away from using jargon that only a few could understand. Keep in mind others who do not know your industry will be reading this and have to understand it.

Work to simplify your business plan. Avoid describing technical products or manufacturing processes that are hard to follow. Your business plan will be useless if investors and management cannot understand it.

Spend Time & Money on Fancy Brochures, Elaborate Presentations, And Anything That is Not Meat

Fancy “flair and sizzle” is great for marketing but not for a business plan. This only waste valuable time and money that only add fluff instead of meat. Your business plan should be all meat and no fat. Adding flair will only lengthen your business plan and make it harder to follow. 

Waste Time Writing The Plan When You Can Be Making Sales

Time spent in the business to generate cash flow is time well spent. The Return on Investment you put into generating cash flow will be tremendously more than working out the best business plan ever. Your business plan will not be able to predict the future, so focus on the now and get cash flowing!

Assume Anything!

Never assume anything about your business. Anytime you assume something, it will most likely be wrong. Assumptions are based on perceptions, not facts.

Never assume you have the deal without the money in the bank. Don’t assume the market will turn in your favor without hard evidence.

The worst thing you can do is assume. It creates a false perception that always leads to failure.

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