The crucial mistakes to avoid when writing a business plan

A business plan is a window into your company and should present you at your best and explain all that you have to offer. However, your efforts could put off potential customers and investors if you make avoidable mistakes when writing your plan.

Here, we look at common mistakes people make when producing their business plan to ensure that yours benefits you and not your competitors.

What is a business plan?

A business plan is typically a 10-25 page document, although it could be shorter or longer depending on your line of work. It aims to showcase your company and what you have to offer. It provides an overview of all aspects of your company that potential investors, lenders and, of course, customers and clients will want to know.

Its pages should provide a detailed picture of the products or services you offer, as well as the company’s goals and the strategies you’ve developed to achieve your aims. Your document should also explore your financial status and projections, showing how you will keep the firm afloat initially and when you expect to turn a profit.

Why you should write a business plan?

A survey of 11,000 companies found those with a business plan had grown 30% faster than those without one. There are several reasons why business plans have such a positive impact on companies, including:

• The process of writing one ensures you’re on top of all areas of your business. Not only does it crystalise your aims, but it also shows how you plan to achieve your goals

• It sets out what makes your product or services stand out from the competition, and addresses the company’s strengths, weaknesses, opportunities and threats, aka SWOT

• Ideally, it impresses the target market, clients, staff, potential lenders and investors

Read more: How to write a business plan for a loan

What are the most common business plan mistakes?

The biggest business plan mistake is not having one in the first place. But barring that particular error, here are seven of the most common mistakes you need to avoid:

Mistake 1: Lack of research

Business plans exist to promote companies and attract others to them. Failing to plan your document and perhaps leaving out essential elements does more damage than good, as it suggests you’re not well organised or have something to hide.

Mistake 2: Not providing evidence

If you conduct research – and not just about what to include in your plan! – it’s essential to show it, perhaps as footnotes or in appendices. Support any claims or conclusions with recent research. There’s no point in using ten-year-old statistics to justify why your product serves the needs of your target audience today. 

Additionally, ensure your research draws on evidence from respected sources, such as trade associations, government bodies and the Office of Fair Trading, rather than relying on anecdotes.

Mistake 3: Setting unrealistic goals

If you’ve done your research, you should be well on your way to producing a robust business plan. Avoid the trap of setting unrealistic goals. Interrogate your findings to ensure they reflect what’s happening or likely to happen, rather than what you’d like to see. 

In other words, don’t present the best-case scenario when writing your financial projections, don’t denigrate the competition – especially if they are well-established – and don’t underestimate your target customers. They won’t love your company or product just because you do.

Read more: How to work out a cash flow forecast

Mistake 4: Not being specific

Just as you must be realistic in your goals, you must be specific about every aspect of your business plan. One of the most common pitfalls is being too vague about who the product or service is for. Sweeping generalisations implying your offering is for everyone won’t work. 

Create a clear picture of your target audience so potential investors and clients feel confident you’ve identified a gap in the market that your product or service can fill. Once you’ve succeeded in selling to your target customer, you can expand your horizons, but only then. Even Facebook started as a service for one type of customer – students. 

Being specific also allows you to highlight what makes your offering different from the competition. 

Mistake 5: Over-hyping it 

Making your product sound like the best thing ever may seem like a sensible approach when you’re trying to impress the reader. However, superlatives such as ‘one of a kind’, ‘tremendous’ or ‘unique’ come across as hollow unless you have evidence to back them up. Let your research do the talking and allow the reader to reach their own conclusions about how great your company and its offerings are.

Mistake 6: Not addressing shortcomings

The flip side of over-hyping your company is underestimating the difficulties and not addressing tough questions about any problems your business may have. As the business owner, you and potential investors must have confidence that your financial projections are solid and backed up by robust market research. 

Likewise, critically evaluate the product to ensure it’s not only different from what else is available but also that there’s a need for it. Addressing shortcomings is less about highlighting weaknesses and more about revealing awareness of potential bumps in the road, demonstrating how you intend to avoid them.

Mistake 7: Not proofreading your plan

Silly grammatical or spelling mistakes stand out like a sore thumb and leave the reader with the impression you lack an eye for detail. Everyone knows spell checks are easy to run. Download grammar-check programs to ensure consistent use of verb tenses. 

Also, check that you haven’t used jargon, slang or acronyms. You might know what SWOT means – see above if you need a reminder – but your reader may not. Finally, ask people you trust to sense-check the plan before publication.

And one for further down the road…

Hopefully, your business plan ticks all the boxes, impressing readers and greasing the path to success. However, the job isn’t done once your plan is published. It’s important to revisit the document periodically, making updates as required. This way, you can ensure the document remains relevant.