17 Key Business Plan Mistakes to Avoid in 2024
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If you’re like most people and you’re writing a business plan for the first time, you want to make sure you get it right. Even if you follow the instructions in one of the popular business plan templates out there, you can still make mistakes.
After having spent countless hours reading thousands of business plans and having judged hundreds of business plan competitions, I’ve assembled a list of the biggest business plan mistakes that I’ve seen.
What is the biggest mistake when preparing a business plan?
The absolute biggest business plan mistake you can make is to not plan at all.
That doesn’t mean everyone must write a detailed business plan. While you should do some planning to figure out what direction you want to take your business—your plan could be as simple as a one-page business plan, or even a pitch presentation that highlights your current strategy.
Your strategy and ideas will certainly evolve as you go, but taking a little time to figure out how your business works will pay dividends over time.
17 common business plan mistakes to avoid
Assuming you’ve at least decided that you should do some business planning, here are the top business plan mistakes to avoid:
1. Not taking the planning process seriously
Writing a business plan just to “tick the box” and have a pile of paper to hand to a loan officer at the bank is the wrong way to approach business planning.
If you don’t take the business planning process seriously, it’s going to show that you don’t really care about your business and haven’t really thought through how your business is going to be successful.
Instead, take the time and use the planning process to strengthen your understanding of how your business will be successful. It will improve your chances with lenders and investors and help you run a better business in the long run.
2. Not having a defined purpose for your business plan
Why are you writing a business plan?
Is it to raise money? Are you just trying to get your team on the same page as you so they understand your strategy? Or are you planning a new period of growth?
Knowing why you are writing a business plan will help you stay focused on what matters to help you achieve your goals, while not wasting time on areas of the plan that don’t matter for what you’re doing.
For example, if you’re writing an internal business plan, you can probably skip the sections that describe your team.
3. Not writing for the right audience
When you’re putting together your business plan, make sure to consider who your readers are. This is especially important for businesses that are in the technology and medical industries.
If your audience isn’t going to understand the specialized vocabulary that you use to describe your business and what you do, they aren’t going to be able to understand your business.
On the other hand, if your audience is going to be all industry insiders, make sure to write in the language that they understand.
4. Writing a business plan that’s too long
Don’t write a book when you’re putting together your plan. Your audience doesn’t have time to spend reading countless pages about your business. Instead, focus on getting straight to the point and make your business plan as short as possible.
Start with a one-page plan to keep things concise. You can always include additional details in an appendix or in follow-up documents if your reader needs more information.
5. Not doing enough research
You don’t need to spend endless time researching, but your business plan should demonstrate that you truly understand your industry, your target market, and your competitors. If you don’t have this core knowledge, it’s going to show that you’re not prepared to launch your business.
To keep things simple, start with this four-step process to make sure you cover your bases with an initial market analysis.
6. Not defining your target market
Don’t assume your products are for “everyone.”
Even a company like Facebook that now truly does target “everyone” started out with a focus on college students. Make sure you take some time to understand your target market and who your customers really are.
Investors will want to see that you understand who you are marketing to and that you’re building your product or service for a specific market.
7. Failing to establish a sound business model
Every business needs to eventually have a way to make money. Your business plan needs to clearly explain who your customers are, what they pay you, and have financial projections that show your path to profitability.
Without a real business model, where income covers your expenses, it will be difficult to show that you have a viable path to success.
8. Failing to showcase current traction and milestones
Great business plans are more than just a collection of ideas. They also demonstrate that you have early traction — a fancy way of saying that you have some initial success.
This could come in the form of pre-orders from a Kickstarter campaign or initial contracts that you’ve signed with your first customers. Traction can be as little as expressed interest from potential customers, but the more commitment you have, the better.
The companion to traction is milestones. Milestones are simply your roadmap for the future — your next steps with details of what you’re going to do and when you’re going to do it. Make sure to include your best guess at your future timeline as part of your business plan.
9. Having unrealistic financial projections
Everyone dreams of sales that start from zero and then just skyrocket off the charts. Unfortunately, this rarely happens. So, if you have financial projections that look too good to be true, it’s worth a second look.
Investors don’t want you to be overly conservative either. You just need to have a financial forecast that’s based in reality and that you can easily explain.
Keep in mind that when first starting out, you may not have exact numbers to work with. That’s perfectly fine. You can work with general assumptions and compare against competitive benchmarks to set a baseline for your business.
The key here is to develop reasonable projections that you and any external parties can reference and see as viable.
10. Ignoring your competitors
Not knowing who your competitors are, or pretending that you have no competition, is a common mistake. It’s easy to say that you have “no competition,” but that’s just taking the easy way out. Every business has competition, even if it’s a completely different way of solving the same problem.
For example, Henry Ford’s early competition to the automobile wasn’t other cars — it was horses.
11. Missing organizational or team information
When you’re starting a business, it’s likely that you haven’t hired everyone that you’re going to need. That’s OK. The mistake people make in their business plan is not acknowledging that there are key positions yet to be filled.
A successful plan will highlight the key roles that you plan to hire for in the future and the types of people you’ll be looking for. This is especially vital when pitching to investors to showcase that you’re already thinking ahead.
12. Inconsistent information and mistakes
This almost goes without saying, but make sure to proofread your plan before you send it out. Beyond ensuring that you use proper grammar and spelling, make sure that any numbers that you mention in your plan are the same ones that you have in your financial projections.
You don’t want to write that you’re aiming for $2 million in sales, while your sales forecast shows $3 million.
13. Including incomplete financial information
You may have a great idea, but a business plan isn’t complete without a full financial forecast. Too many business plans neglect this area, probably because it seems like it’s the most challenging. But, if you use a good forecasting tool like LivePlan, the process is easy.
Make sure to include forecasts for Profit and Loss, Cash Flow, and Balance Sheet. You may also want to include additional detail related to your sales forecast.
For example, if you run a subscription business, you should include information about your churn rate and customer retention.
14. Adding too much information
Don’t fall into the trap of adding everything you know about your business, your industry, and your target market into your business plan. Your business plan should just cover the highlights so that it’s short enough that people will read it.
A simple and concise plan will engage your reader and could prompt follow-up requests for additional information.
Focus on writing an engaging executive summary and push non-critical, detailed information into your appendix — or leave it out altogether and leave the details for those that ask.
Remember, your business plan is there to serve a purpose. If you’re raising money, you want to get that next meeting with your investors. If you’re sharing your strategy with your team, you want your team to actually read what you wrote.
Keep your plan short and simple to help achieve these goals.
What should not be included in a business plan?
Here are a few things to leave out of your plan:
- Full resumes of each team member. Just hit the highlights.
- Detailed technical explanations or schematics of how your product works. Put these in the appendix or just leave them out completely.
- A long history of your industry. A few sentences should be enough.
- Detailed market research. Yes, you want market research but just include the summary of your findings, not all the data.
Make sure to include:
- Executive summary.
- Financial projections.
- Market research (just a summary)
- Competition overview
- Funding needs (if you’re raising money)
15. Having no one review your plan
As with any work that you do, it’s always helpful to have a few other people take a look at your work as you go. You don’t have to please everyone and you don’t have to implement every comment, but you should listen for themes in your feedback and make adjustments as you go.
A fresh pair of eyes will always help spot pesky typos as well as highlight areas of your plan that may not make sense. You can even explore having a plan writing expert review your plan for a more in-depth analysis.
16. Never revisiting your business plan
Business plans are never 100% accurate and things never go exactly as planned. Just like when you set out on a road trip, you have a plan to reach your final destination and an idea of how you will get there.
But, things can change as you go and you may want to adjust your route.
Planning for your business is often the same as that road trip and your plans will change as you grow your business. Keeping your plan updated will help you set new goals for you and your team and, most importantly, set financial goals and budgets that will help your business thrive.
Incorporate your plan into regular review meetings to be sure you’re consistently revisiting it and integrating the time spent reviewing into your current workflow.
17. Not using your business plan to manage your business
Revisiting and revising your business plan is how you use your plan to manage your business. If you aren’t updating your goals and following a budget, you’re flying blind. Your plan is your ultimate tool to help you manage your business to success. You can use it to set sales goals and figure out when and how you should expand.
You’ll use your plan to ensure that you have healthy cash flow and enough money in the bank to handle your growth. Without managing your plan, you’re left to guess and live with a level of uncertainty about where your business is headed.
How a business planning and management tool helps you avoid mistakes
Writing a business plan can seem like a daunting task. Sure, you can do it yourself with free templates and advice like you find on this website. But, doing it on your own can just slow the process down, lead to mistakes, and keep you from actually working on building your business.
Instead, consider using a planning tool, like LivePlan, which features step-by-step guidance and financial forecasting tools that propel you through the process.
LivePlan will help you include only what you need in your plan and reduce the time you spend on formatting and presenting. You’ll also get help building solid financial models that you can trust, without having to worry about getting everything right in a spreadsheet.
Finally, it will transform your plan into a management tool that will help you easily compare your forecasts to your actual results. This makes it easy to track your progress and make adjustments as you go.
So, whether you’re writing a plan to explore a new business idea, looking to raise money from investors, seeking a loan, or just trying to run your business better—a solid business plan built with LivePlan will help get you there.
