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Writing a business plan is one of the first important steps you will take as an entrepreneur. It is the tangible gap between entrepreneurs who have just an interesting idea and entrepreneurs who have a real and promising structure in place. It is a key that opens doors to investors, partners and employees, and the blueprint that makes the first years of your operations possible.
Therefore, the strength of your business plan has a major influence on the bottom line of your business, especially at the start. If your business plan is poorly written or misses important information, it could prevent you from getting the funding, help, or attention you need. Despite this, too many potential entrepreneurs take the business plan phase lightly and go through it without thinking too much about it.
When writing your business plan, be sure to avoid these five common mistakes:
1. Skip a main section.
There are no hard and fast rules about what constitutes a business plan, for example, but the mentors and investors who will browse your work will have certain expectations about its content. You need a business summary page, a growth model that includes financial data, and you need to describe your target audience and explain why they need your product.
List your competitors and describe why you are better than them. Mention your hiring plan and how you plan to grow. A business plan missing one of these critical components could instantly disqualify you from any other conversation. Make sure you cover all of your bases.
Related: Business Plans: A Step-by-Step Guide
2. Neglect the research component.
Your idea is important, but ideas are limited to the mind. What exists in reality and what people want to see are objective figures that support this idea. You may have perfectly imagined the product, but if the data does not confirm your assumption, no investor will support you.
Take the time to do your research. Examine your target demographics, the performance of your competitors and expected growth rates in your industry and similar statistics. The hard facts cannot be refuted, so the more you include in your business plan, the better. Not including it will make you look amateurish, and could ruin your chances of making a solid first impression.
3. Be vague.
When you start to develop your business idea, it can come to you in vague terms. You may think your new app is “a way” to help people prepare breakfast, but that vague language is not going to cut it for serious investors and potential partners.
To make a good impression and solidify your business plan, you should be as detailed as possible. Explain exactly what the application is, exactly what it does, exactly how long it will take to develop and exactly how you plan to market it. This applies to each section of your business plan. Trace as much detail as possible without deviating from your general intentions.
Don’t underestimate the power of thoroughness.
Related: Are you considering crowdfunding? Why you need a solid business plan first.
4. Write in a closed system.
You came up with your idea, thought about it well, researched Google to find data to support your idea, and spent weeks fleshing out the business plan in your basement . It is complete, well documented and well written, but there is a problem: you wrote in a closed system.
You did not receive any outside opinions or feedback before you finished your work and, in all likelihood, you did not resolve the important problems that did not appear to you but should have affected someone else. You avoid this by carrying out market research or surveys on your product and by talking with your colleagues, your family and your friends.
5. Bored your reader.
The term “business plan” makes this document boring, and while it’s hard to liven up your financial spreadsheets, make your plan more exciting wherever you can. Talk about possibilities for future expansion. Show your passion for the idea. Write in a familiar and informal way, if necessary, to reach your audience directly.
If you are trying to present your business as a series of numbers, no one will want to read your plan. If you make it exciting, people will see the personality behind the idea.
Consider your business plan as the foundation of the building that will one day be your business. This requires your full attention, all your efforts and your full commitment. Invest the right time and care in your business plan and it will help you turn your idea of speculation into reality.
Related: 3 Ways untested business plans are worse than a waste of time