Your business is as successful as it looks on paper; therefore every business plan needs to be a well-informed representation of your business – as accurate as possible.
Often times, small business owners lay emphasis on the physical structure of their business, paying less attention to the business plan itself, which in the real sense is the backbone of the company.
The importance of an error-free business plan cannot be ignored, that is why this article is aimed at addressing some major mistakes that you should stay clear off while preparing your business plan.
1. Unclear Objectives
What is your business about? What solution does your product/service offer? Who are your target clients? Why is your business worth investing in? What is your investor’s expected return and when will it be due? As simple as these questions seem, some business plan fail to answer them in clear and detailed sentences. It is important to grab the interest of an investor by first describing the investment opportunity. While your business plan describes the concept in detail, it must also address the purpose of the plan in a compelling way that excites your prospective sponsor.
2. Extravagant budget
There is not cut rule as to how much you can allocate to staff salaries, equipment, and other segments of your business budget. However, minimization is the key. Some business owners tend to hike the prices of their startups, in order to accumulate random resources for another project. Note that most investors carry out market surveys for some of the items that appear too expensive, and sees a hike as crafty and unprofessional. In the same light, an investor will not be willing to fund a business where the projected salary payments are excessive. Be extra careful when it comes to your price list, start small, you will eventually grow. Most of the startups in our Nigeria hustle series started with a little budget and have grown into multi-million Naira companies.
3. Missing numbers
Investors want to know how much your business can make within the shortest possible time as well as when the business will break even. However, if your calculations are wrong [by just a thousand naira higher or lower], it shows inaccuracy and your investors may not take your miscalculating flaw lightly.
The figures must be consistent and show that your company can generate free cash flows, run profitably while clearing off their debts at the same time.
4. Stale Marketing Strategy
For your business to be successful, it needs patronage, whether it’s product or service based. Guerrilla marketing, Word-of-Mouth marketing, close range market and a few others may be stale or common, and might need reinventing to make significant sales. What do you intend to do differently if you must adopt the above marketing styles? Be wise to avoid the mistake of stating a stale strategy in your business plan, as that might just be what will ruin your chances.
5. Underestimating Your Competitors
No business idea is entirely new. Someone somewhere is already running, or will eventually run a company that offers similar solutions as yours. Therefore, refusing to state how you intend to beat your competition shows failure in anticipation. Underestimating your competitors can be considered the threat of entry. You need to think ahead! What will the competitive landscape look like in a few years? Are there significant barriers to entry? Or is it likely that better-placed competitors with greater resources will follow a successful entry? What will emerge as the bases for competition? Will your company be well placed to compete on these bases in the future? An absence of the answers to these questions may lead to a failed business plan.
In a nutshell, your summary is as important as your introduction and should have the same if not more punch lines to drive home the ultimate message that your business is worth pouring money into. Make no mistake about that.