13 business plan mistakes to avoid
A good business plan can be the difference between a funding application being rejected or accepted.
So, to help you get it right, here are 13 business plan mistakes to avoid when applying for funding.
1. Unrealistic financial projections
When seeking funding, the prospective funder will want to know that your business can make repayments. Therefore, your financial projections need to be as realistic as possible in order to give the funder confidence in your business. Demonstrate that you have considered all the key factors that could impact your cash flow and show when there will be more money coming in than going out.
2. Hiding your challenges
Whilst it’s important to champion the great bits about your business, make sure you don’t overlook the challenges you might also be facing. Every business has them, regardless of the sector you’re in, but talking them through with your lender can bring solutions as they may have worked with businesses with the same challenges. It can also demonstrate that you know what you need to work on and inspire confidence.
3. Ignoring your competition
All businesses have competition so it’s important that you address who yours are and why your business will be better. You should also answer questions such as: how big is your target market and how is it changing? And, what trends are impacting the market and how will this affect your success? This will show that you understand your market.
4. Being too vague
A prospective funder will be expecting to see an executive summary, business description, market and competitor analysis, sales and marketing approach, management and operations plan and financial forecasts when they look at your plan. So make sure you include all of these sections. Missing bits out may not give the funder enough information to base their decision on.
5. Including too much information
That said, it’s important not to go overboard. Try to keep your business plan short by focusing only on what the reader needs to know – what you want to achieve, how you will get there and the things you need to do along the way. A good way of achieving this is by adding an appendix at the end of your document to include monthly projections, management CVs and other details that are too long for the main body of the plan.
6. Not including visuals
You can make your plan more engaging by using charts and images. Charts make your important numbers easier to understand whilst location shots, menus, blueprints, floor plans, logos and signage photos can all be useful ways to back up your content. Just make sure you only include visuals that you’ve referenced in the text or this can add confusion.
7. Using complicated language
It’s important to get your message across in the clearest and most concise way possible. So, avoid using long, complicated sentences, buzzwords, jargon and acronyms. Instead opt for simple, straightforward language that will convey your message without any confusion.
8. Sloppy presentation
The physical look and feel of your business plan can make a huge difference in its success. So, make sure you take some time to tidy it up and make it look professional. Give your document a well-designed cover and title and include a contents page. You’ll also need to format your text to make it easily digestible; this can be achieved by using page breaks, subheadings, bullet points and white space.
9. Overemphasis on the design
However, whilst the design, formatting and length are important factors to consider when creating your business plan, don’t get bogged down by these details to the detriment of your actual plan. The facts, research and passion to back up your business idea will be much more appealing than a well-designed plan with no substance.
10. Not proofreading it
It’s surprising how many business owners submit a business plan without ever proofreading. But a plan full of errors will come across as unprofessional and is unlikely to inspire confidence in your business. So, once you’re happy with your business plan, take a short break from it and then go back and re-read it. Does it fulfil the objectives? Are there any spelling, grammatical or numerical mistakes?
11. Keeping it to yourself
When you are happy with your plan, test it. Give it to a friend, colleague or expert adviser and ask for their feedback. Often they will spot errors that you’ve missed or holes in your plan because you know the information off by heart.
12. Never reviewing it
Your business plan should never truly be finished. As your business changes and grows, your plan should be updated to reflect these differences. This is essential in order for it to remain effective and continue to help serve your business’s purpose and goals.
13. Ignoring its full potential
As well as supporting any funding applications, there are so many other benefits to having a business plan. Firstly, it can help to convince customers, suppliers and potential employees to support you and your business. Most importantly, however, your business plan will help your business to clarify your business idea, spot potential problems, set out your goals and measure your progress. It really is a roadmap to success.
If you need help raising finance for your business as a leading commercial finance broker we could help. Contact us today on 0800 9774833 to discuss your requirements.