Many companies have a business plan, but most of these are not useful and are not worth the time and the paper they are printed on because they contain these mistakes. Avoid the following when creating a business plan:
The presentation of the plan is important to make a good impression on potential investors. The plan should be well organized and free of any errors. Someone else should proofread the plan before it is shown to investors to ensure everything is in order. Your business plan’s margins, page numbers, charts, tables, and contents must be consistent and labeled correctly.
When creating a business plan, have someone else proofread your plan before you present it to an investor, banker, or venture capitalist. Most investors will only take a few minutes or glances at your plan, so it needs to be well organized and easy to understand.
If you want investors to take your company seriously, you must present your plan professionally and formally. This means ensuring that all margins are consistent, there are page numbers and a table of contents, and that all charts and tables are labeled correctly. When creating a business plan, pay attention to the small details, as they can make a big difference in how investors perceive your company.
A business plan should be clear and to the point without being vague so anyone can understand it. It should not be overly complicated with technical language or jargon. If there is confidential information involved, it should be shared on a need-to-know basis after non-compete and nondisclosure agreements are signed.
A business needs customers, products and services, operations, marketing and sales, a management team, and competitors. At a minimum, your plan should address all of these topics.
Furthermore, a complete plan should include an industry overview, focusing on market growth or decline trends. As you develop your business plan, it’s important to back up your assumptions with real data. This data can come from customer buying habits, competitor analysis, and overall market trends.
Doing your research and having factual data to support your claims will make your business plan more convincing to potential investors. This way, when you make assumptions or projections, you have numbers to back them up. If you don’t, investors will likely not take your plan seriously.
Lastly, your plan should include extensive financial projections for the next three years, including monthly cash flow, income statements, and annual balance sheets.
On the other hand, don’t let technical details bog you down! This is especially common with technology-based startups. When creating a business plan, keep the main plan’s technical information to a minimum. If you want to include them, do so elsewhere in an appendix.
You can do this by breaking your plan into three parts: a two- to three-page executive summary, a 10- to 20-page business plan, and an appendix that includes as many pages as needed to make it clear that you know what you’re doing. This way, anyone reading the plan can get the amount of detail they want.
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