There are a number of mistakes most up-and-coming entrepreneurs make when they start writing their business plan. Among these we find:
- Ignoring the competition: Every business will have a competitor. That is why, when you write the business plan, you need to show that you know everything there is to know about your direct and indirect competitors. If the entrepreneur will underestimate his or her competitors and overestimate the value of the product he or she delivers, this can be considered as a negative sign among investors because they will begin to believe there is a risk that you have lost sight of other elements that may have a significant impact on your business.
- Unrealistic financial forecasts: It’s true that investors are interested in companies that are in the expanding stage and aim to be a part of profitable businesses. Yet, accurate numbers and realistic aims are important features for investors. Too much optimism when presenting the cash flow can be interpreted as evidence of superficiality or ignorance of the realities of the market.
- Overestimating the number of consumers. If you start from the premise that your market share will be gigantic and everyone will become your client, you’ll soon start to lose credibility in the eyes of the people evaluating your business plan. Maybe, after some time, you will be able to increase your market share and to tap into more target markets, but, in the early stages, you will have to focus on a niche market where you will have to effectively cater for the needs of your clients.
- Sloppy editing. This may seem like an aspect with little to no importance because, most entrepreneurs start from the premise that their idea is so good and their profit potential is so enormous that the way in which the business plan is presented is of little importance. Actually, investors pay careful attention to such details thus, a business plan full of spelling errors can transform an entrepreneur into an unreliable business person, even though his or her idea is great. Therefore, take into account that it is important not only what you write, but also the way in which you write it.