Six Common Mistakes Made by Business Plan Writers
Writing a business plan well is not easy to do. There are usually eight or nine different sections to most business plans, depending on company and industry. In each one of these sections, important information needs to be included to ensure readers fully understand the vision and objectives of the company.
By failing to include or, include incorrectly, important information, small business owners may miss out on funding opportunities and potential market niches. Because of the importance of writing a good business plan, with all the needed information, our business plan writers have come up with a list of six common mistakes made by business plan writers.
Embarrassingly enough, even our professional business plan writers have made some of these mistakes. So, hopefully, we can help small business owners avoid common mistakes made, even by professional business plan writers.
#6 Mistake Made by Business Plan Writers: Forgetting to Gather all Information.
When professional business plan writers first meet with their clients, they gather all information needed to write a well-articulated business plan. However, in these meetings, discussions often are derailed from the business plan main topics. For example, a popular side discussion often includes topics such as competitors and advertising strategies. Granted, these topics are important for writing a business plan. However, in-depth discussions may lead to less time available for all business plan topics that need to be covered. As a result, some business plan writers may forget to gather all information needed. This leads to additional calls to business owners and lost time in writing a business plan.
Lesson learned: make sure to gather all important information about a business before side topics are covered in depth.
#5 Mistake Made by Business Plan Writers: Not Including All Important Information.
Most business plans follow the same structure: executive summary, company information, organizational structure and so on and so forth. However, for some industries, certain pieces of information are not as important as other portions. To illustrate, a good friend of mine recently wrote a business plan for a hair salon. In their business plan, there is approximately 6 different services offered. However, the business intends to offer well over 10 different services. Because the plan was missing four services offered, a bank underwriter held up funding for a business until all aspects of the company were covered in the plan.
Lesson learned: Include a discussion about ALL services offered by a business.
#4 Mistake Made by Business Plan Writers: Incorrect Information.
Having correct information is a business plan is almost a subjective concept. This is because, for most business plans, the company has yet to begin operations. From the time a business plan is written and a business has started, business owners may change services offered, target markets or other parts of a business plan. This leads to some parts of the business plan as being obsolete. In this situation, having correct information is helpful but not absolutely critical.
However, there are certain aspects of the business plan that needs accurate information, such as the industry analysis. The industry analysis is a review of competitors and industry statistics available. Some business plan writers may obtain information from less than reputable websites. These sites may include blogs or other similar types of sites. When this happens, information may not be factual. This can lead to incorrect information conveyed to business owners. As a result, important business decisions may be made based on information that is not reliable. As one can imagine, this is not the ideal scenario.
Lesson learned: Use reliable sources for industry information.
#3 Mistake Made by Business Plan Writers: Errors in Financial Statements.
The financial statement component of a business plan is one of the most complex areas. In the financial statements, there are literally hundreds if not thousands of calculations that are done each time a figure is changed. For example, if daily sales for a hot dog were changed from 100 to 120, then cost and revenues for the next five years would be impacted as well as the balance sheet and cash flow statement. If just one calculation embedded in a spreadsheet is incorrect, then all numbers in calculations may be impacted as well. This would lead to all the financials being incorrect. Further, identifying where an error is in the spreadsheet may take hours if not days.
Lesson learned: Using proven financial templates for your financials.
#2 Mistake Made by Business Plan Writers: Wrong Target Market.
It is hard to imagine anything worse than a business owner starting operations and targeting a demographic or target market that really does not need their product or service. As strange this may sound, it does happen all the time. Part of a business plan writer’s job is to ensure that the client’s product or service is aligned with a target market that wants or needs their services.
Lesson learned: Align your product or service with the correct target market.
#1 Mistake Made by Business Plan Writers: Failing to Understand Vision for the Company.
The number one common mistake made by business plan writers is failing to completely understand the client’s vision for their company. When I write a business plan, one of the main objectives that I seek is to have a vision in my head as to what the company will do and who the products and services will served. With this vision, aligning all aspects of a business plan with the vision is impossible. Further, if the business plan writer failed to have the correct vision, then after the second meeting with a client, the whole business plan may need to be revised based on the correct vision.
Lesson learned: Completely understand the client’s vision for their company.
Author: Paul Borosky, MBA., ABD.