There are a few common business plan mistakes that seem to come up again and again. We’ve seen these happen many times in our work with clients, and wanted to put together a short article on what these are and how to fix them.
Business Plan Mistake #1: No Milestones or Goals
Every successful business has goals they’re striving for. Established businesses have specific revenue and gross margin goals they’re trying to hit. They don’t just do this for the year, but break it down into quarterly and monthly goals. Having these goals helps them track progress. You can’t tell how well you’re doing if you don’t have numbers to compare against. When a business plan comes to us without any goals or milestones, we help them refine the ideas in their head into concrete milestones to shoot for. They should be realistic, as inflating your numbers to make your business look good just won’t go over well. Investors will catch on, especially since you wouldn’t have the data to back up the big milestones. If you’re having trouble establishing milestones and goals, here are two questions to ask yourself:
How much gross revenue do you expect to make each quarter of the first year?
How much gross margin would that revenue level give you? Speaking of revenue and gross margin, let’s talk about how you’ll get your customers.
Speaking of revenue and gross margin, let’s talk about how you’ll get your customers.
Business Plan Mistake #2: Vague Marketing and Sales Plan
Who is your target audience? If your answer is “everybody,” you’ll get laughed out the door by investors. Even though a business may actually cater to a wide variety of audiences, you need to start with a core market to go after. This will help you narrow your marketing and learn what works to sell your product or service to that market. From that point you can scale up and build a bigger business. There’s more to your marketing plan then just the audience though. You need to understand who your competitors are, what you bring to the table, how you’ll reach customers, and more. In essence, you need to answer a few questions in the marketing section of your business plan:
Who is your audience? What are their demographics and interests?
How will you reach this audience?
What will be your core message to them?
How are you different or better from your competition?
You don’t need to include every single thing here, such as the copy of your ads or the zip code of your target audience. But you do need to show that some thought and research were put into this.
Business Plan Mistake #3: Formatting, Spelling and Grammar
This may seem like common sense, but you’d be amazed at how many business plans out there have misspellings, terrible grammar, or sloppy formatting. To fix misspellings and grammar, the best thing you can do is run a simple Spelling and Grammar check. We also recommend reading the document out loud, which will help you identify things that just read funny. Maybe it has too many words and sounds clunky. To fix formatting, here are a few things to check:
Are margins the same on all pages?
Did you use the same font type and size?
Is there a table of contents?
Do sections have headings to help organize the document?
These things go a long way to helping the business plan look and read better. Don’t make the most common business plan mistake of all – not getting help with it. Give us a call at (714) 663-8000 and let us help you craft a plan that will keep you focused and wow investors.