Entrepreneurs and small business owners may know exactly what their goals are -- but that doesn't mean it's easy for them to create a step-by-step plan. When it comes to investments, loans, and other business capital, it's essential to have a well-developed business plan. Nevertheless, there are some critical mistakes that are often made, especially by those just starting out.
1. Focusing Too Much on Concepts and Philosophy
A business plan is designed to be a detailed look into how the business is going to grow and develop in the future. While some of the business plan should discuss the company's culture and goals, it should not solely be devoted to the philosophy of the business or more abstract concepts. These are exciting, but they aren't generally what investors are looking for. Investors want substance.
2. Throwing a Bunch of Numbers At It
By the same token, investors don't just want to see spreadsheet after spreadsheet of finance data. The data should be there, but it also needs to be summarized and effectively described. Conclusions should be given in addition to a short investor's review at the end of business plan so that the investor understands exactly what purpose the information you've displayed serves and how you've analyzed this data.
3. Being Far Too Optimistic
In business, it's far better to be realistic about your investment returns rather than over-promising. Investors are knowledgeable about their markets and they know what looks right to them. If a project promises too much, they will realize it. Many investors are looking for stable investments that may have a moderate yield; they aren't all looking to "strike it big" or make it rich. Thus, it's not always necessary to sweeten the pot; it's better to have accurate numbers that correctly display projected growth.
4. Forgetting About the Writing and Formatting
Many small business owners want to concentrate purely on the numbers and concepts in their business plan. This absolutely makes sense from their perspective; it's the numbers and concepts that will truly make a difference to their business. But investors want to see a polished, professional business plan that displays attention to detail. Hiring an editor is not a bad idea for those creating their first business plan.
There are professional business plan companies that can look over your business and construct the ideal plan for you. Working with a consultant may be helpful for those who have never constructed a comprehensive business plan before.