Having worked for over 273 organizations, I find that there are seven common mistakes that entrepreneurs make when they want to write a business plan. Here are seven of such mistakes.
1. The Business Plan Should Be Very Long
The world famous business magnate Richard Branson of Virgin Conglomerate shared how that his first business plan for his first business was just one page. That’s very interesting, considering the fact that entrepreneurs of today think more about the number of pages their business plan should be. Sometimes you would hear an entrepreneur say “I want my business plan to be 40 pages” oh no!
It’s not about how long or short your business plan is, what’s more, important is the content and the content is determined by the nature of your business and industry. But generally speaking a business plan of 20-25 pages is fine, it could be less; just remember that it’s not about the length but the content.
2. I Don’t Have Any Competition
Quite funny, when people say that they have a business idea and then they add: “there’s nobody offering it, I don’t have any competition.”
That’s a very wrong statement and it can stop you from getting potential investors. You may want to ask how that simple statement that you probably thought would make people believe or want to support your business, would result in actually driving them away?
Good! When you say you don’t have any competitors offering your kind of product or service in the market, you are actually saying two things:
- My business is not lucrative so no one is doing a similar thing
- I really don’t know my market because I can’t see any alternative to my offering
Yes, you are really saying you don’t know the market, you don’t know your competitive landscape.
Because every business should either have a direct competition or indirect competition, ask yourself: “what’s the alternative to my product,” before Uber came, people where commuting, Uber couldn’t have said they didn’t have any competition when they came on board. Even though right now they have more direct competition in the likes of SmartCab, EasyTaxi, Taxify and Udrive (U-Drive is the first car sharing company in the United Arab Emirates and they are our client, good to promote your client with every opportunity, so don’t blame me)
3. Your Business Model
It’s very important you state your business model correctly, for instance, don’t just state that you would make money or you would make $10 million in the first three years, no! Your business model should address the “how will you make money” question. Are you going to offer a subscription model, where people pay per month or quarterly, is it a one-off payment?
Will you operate a commission-based model, and generate revenue by a commission for each business you do? How much will you charge, what will be your profit margin? Don’t just say you will make money, in the business model section of your business plan, explain the how.
4. Avoid Jargons
So I would say NPO, sorry what do you mean by NPO you may ask. I thought you would know. Well, that’s what happens when people use jargons to write their business plan. Now, NPO is a medical jargon that means a patient should not take anything by mouth. But it won’t make sense to you if you are not a medical personnel.
Likewise when you write your business plan and you are using terms just to show you know your stuff, you would end up confusing people, and this is because if you are a programmer for instance and you are using technical jargons, the person going through your plan may be a business executive who has no understanding of those terms.
It’s best to keep your writing plain and if you must use jargons, you should explain what they mean.
5. Be Realistic
When it comes to making projections, be realistic! It doesn’t help anybody when you make projections that are not realistic, don’t say you would have 100,000 customers in the first month when you know 10,000 is more realistic neither should you say you would make $10million in the first month when you know $200,000 is more achievable.
You should give room for growth, there are several businesses that don’t even make money in their first month and investors know about this, so don’t try to impress anybody with those heavy figures, you would end up turning them now. Rather, have a projection of 3 or 5 years, and you can introduce you heavy figures as you project growth through the years.
These days, many people (myself inclusive) go to Google to get information, but sadly some people go to Google pick a business plan template and then, they what to follow the exact format.
This may not be the best fit for you, it’s like trying to force a cow to be a dog, and that doesn’t make sense! Because the business plan template has Web Plan Summary, now you own business must have plan Web Plan Summary, not so!
The structure of your business plan is determined by the nature of your business. So what business TYPE A would need as a section in their business plan, business TYPE B may not need it.
7. Make Changes
Your business plan is not cast in stone, it’s a living document as such you can update it periodically. Sometimes market conditions may change, you may even get good feedback from potential customers, family and friends, and even investors, take the feedback and make changes to your plan where needed.
As an entrepreneur, you should focus on action, don’t wait! By getting on the field, you get more information about your business. And know this too, you are going to be the no.1 marketer of your business.
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The description is really helpful.. thank you.. !