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Most of you will have a business plan for your startup, as this document serves as a blueprint and roadmap for your business. Whether to share with management to assist with strategy or present to investors for funding, the business plan will provide the basis for future decisions.
However, despite its importance, your business plan probably sucks. It does not achieve its objective and ends up distorting your business at the expense of decision makers.
Here are the top five reasons why your business plan fails and how to overcome these obstacles.
1. You don’t write with your audience in mind.
Using a business plan for everyone will make your plan irrelevant because it will never satisfy any audience group. The business plan must be written for a specific audience. Only then can he respond to their concerns and questions.
Action point: Be clear from the start for whom you write the business plan. Next, describe the key questions they will want answered and structure the plan taking these questions into account.
Related: Business Plans: A Step-by-Step Guide
2. You spend too much time discussing the merits of your business.
No one knows your business better than you do. As such, you will sometimes end up procrastinating to show off your knowledge more than to add value to the reader.
It’s a good way to push away any reader and it will hurt your most relevant points.
Action point: Write just enough to answer the key questions in the first point. You can determine which section you should include in the plan by recognizing who you are writing for. If the plan is for your team, for example, you may not need to go into a lot of detail around the product section, as they will have a good grasp of this.
Always proofread and modify your plan to remove excess words and sections that add nothing to the reader. It is also a good idea to get others to read the plan before finalizing it.
3. You cannot articulate your market.
Too many entrepreneurs are doing a copy and paste exercise on the market section using vaguely relevant material that they are removing from the Internet. When I was an investor, it was often the most disappointing section.
A well thought out section of the market stands out, however. You have to pay attention to details and be succinct.
Action point: Break down your market to identify exactly what and who is relevant. For example, in the field of technology and software, citing the entire software market is useless if your company operates in the field of Big Data. Think about the position of your end customer and explain the characteristics of this specific market.
4. You do not explain your financial data.
Many entrepreneurs are the most uncertain about the financial section of their business plan – perhaps because of the perceived complexity and ignorance. But it doesn’t have to be that difficult. Like the other parts of your business plan, tell a story.
Related: 5 Ways To Hack A Business Plan
Action point: Clearly explain the assumptions in your financial statements. For example, if you assumed 10% revenue growth and 60% gross profit margin, what is it based on? When speaking in the financial section, be sure to explain what the numbers are story you in simple language. This approach is more useful than mechanical indication of numbers. the relevance from what the data shows allows for tangible dialogue with your audience.
5. You don’t explain the rest.
A large number of business plans follow one another in sections of the business plan, as a checkbox exercise in order to complete it. They do not explain the rest. Just as it is important to define the context from the start by identifying your audience, it is important to conclude on the direction you plan to take with the company in the short and medium term. Any business plan would be lost without it.
Action point: Spend time distilling the key points of the plan you have developed to present what you want your audience to do with the plan. If your audience is your team, you want to present a vision of the strategy that you can discuss with them. For an investor, state your financing needs, your steps and have a high-level transaction structure to work with.
In the end, a business plan will never be final, as it will continue to change as the business grows and you respond to threats and opportunities in your market. However, adhering to the persistent points above will ensure that your plan has a solid foundation, so that your decision making is well thought out.
Related: The Essential Guide to Writing a Business Plan