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Chapter 1. Business Plan Basics > Avoiding Common Business Plan Errors

Avoiding Common Business Plan Errors

No matter which type of business plan you choose, there are a few cardinal rules that apply to all plans. Try to avoid these common errors and your business plan has a better chance of gaining funding and success.

  • Don't look like an amateur— Create a professional-looking plan. I can't say it enough times. Your business plan represents your business idea—and you. Its purpose is to convince investors, bankers, and/or management to fund or support you and your idea. Print your plan on quality paper on a laser printer, with color-coded charts and graphs. Check it for spelling and grammar and make sure your numbers add up. Someone reading your plan who notices unprofessional errors will also wonder if you'll make similar oversights running your business.

  • Don't be a blowhard— No matter the size of your plan, the reader should be able to get a good feel of your business idea in 15 minutes and read the entire plan in an hour. A business plan is not a doctoral thesis.

  • Don't be dull— Jazz up your plan. Don't be afraid to add graphs, charts, and illustrations—in color!

  • Don't over- or underestimate your business idea— Investors can smell a puff job. Tell them the facts and just the facts. Leave out the superlatives about being the best or mindless business jargon. Your idea doesn't have to blow their socks off. Just show you can produce results. Remember, there are very few new ideas. What makes a business a success is in its execution of that idea. Besides, a new idea is much harder to sell than one people are familiar with.

  • Don't be vague— Tailor your plan to your business objective. One size plan does not fit all. Business plans can be used to start a business or run a business. In other words, keep your objective in mind when writing your plan. Who is your intended audience and why are you writing this plan?

  • Don't avoid the negatives— Think competitively throughout your plan and sell! Anyone reading your plan knows you have competition. You also have risks. State them. Call them out. Too many plans shy away from these because it inserts a negative into the presentation. Show the reader how you will deal with these.

  • Avoid hockey stick financial projections— Don't be blue sky with your financial projections. Stay conservative so you can defend them. Overestimate your expenses and underestimate your revenue.



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