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1.
No clear plan for progress
First of all, you must make
it clear to the reader just what the business is, and that you can
reach the goals outlined in your plan. Avoid broad,
unsubstantiated statements like "It is a known fact..."
If you cannot support statements with good, solid data, then don't
make them. Show prior successes; write
detailed sales plans with numbers and schedules. Talk about
previous marketing efforts and compare them with future marketing
efforts.
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Many plans describe where the business is now and talk
about the markets they will sell to and how much money they will
make, but present no step-by-step method to get there. Lenders
want real facts. Be able to support everything you say, every
number in your projections. Vague ideas, circuitous
statements and shot-in-the dark guesses just won't do.
2.
Failing to describe the product in layman's terms
Be clear, in simple language, what you are doing or making. In general, product description isn't tool helpful for running the
business, except that it leads you to question how you designed
your product, and if it is right for the market. Avoid talking
about the product too much, and when you do, avoid using a lot of
industry jargon. Lenders will not be inclined to approve a loan or
provide financing if they cannot tell what the business is.
Pretending that you are explaining your product to a group of
10-year olds will do the trick.
3.
Lack of market and competitor research
You must show where
you fit in your market and you must know the details of your
competitors' products. List your competitors and identify
their strengths and weaknesses. If possible, include estimates of
their market shares and profit levels. Everyone has
competitors, and to say that "We have no competition" in
a business plan is almost a sure predictor of failure. To run a company effectively you have to know
them and respect them.
4. Incomplete financials
Provide financials that are
detailed enough that a reviewer can make guesses about your
accuracy, including a clear and complete list of assumptions that form your
financials. You must show actual figures if you have them. It is
also advisable to have monthly figures at least for the first year; while
tedious, it shows your foresight in getting through the slow months of your
business. Most importantly, make sure that your numbers make sense. Review
them thoroughly to ensure consistency in all sections, and back-up with
facts and sensible plan every growth assumptions that you make.
5. Huge
appendixes
The
business plan should include supporting materials such as brochures, resumes
of key managers, technical papers, summaries of market research studies,
references from people acquainted with the company or founders. However,
the idea that
a heavier document is more impressive doesn't work here. Be careful not to go
into too much detail.
6.
Bad
Grammar
Nothing
turns off a prospective investor faster than a poorly written
business plan. If you think that your writing is not at par, get a
good editor. And review, review and review.
7.
Too
little detail.
There
are some principals who write four-page plans and feel they have
nothing more to say. Use the outline as a crutch and keep
researching and writing. Also, many of you who write four-page
plans think businesses don't need plans and that you can do it all
from your head. If you want investors, you must have a plan.
8.
The
overall plan is too long
Avoid
being excessively wordy in your plan. Forty
pages or fewer is ideal for attracting investors; eighty pages is
definitely too long, especially when you can reduce it just to 15
pages. Stick to the facts, state them clearly, and do not repeat them
unnecessarily. The goal is not to write a long business plan, but a good business
plan.
9.
Overuse
of Acronyms
As
much as possible, reduce the use of acronyms in the plan, making
your readers go back and reread the definition. If the full
name is too tedious to type out, consider renaming it.
10.
Redundancy
Organize
your plan carefully and put each fact and plan in only one place,
the place where it tells the story the best way. People who read
business plans appreciate brevity and view it as an indication of your
ability to identify and describe in an organized manner the important
factors that will determine the success of your business.
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