Because we’re in the middle of a campaign pushing the need for business planning and promoting our new free business planning tool, we thought we’d repost this great post from 2012. It’s still true today.
Based on experience reviewing hundreds of business plans for new and small businesses mainly in the “tech” space, I drafted the following list of common mistakes and flaws seen in plans. Follow them if you want to write a truly dreadful business plan and avoid them if you wish to write a good plan:
- Don’t include a contents list, don’t number any pages and don’t follow any consistent approach for section heading etc.
- Do write the plan’s summary before you write the plan, or, better still, don’t include any summary.
- Do develop your business strategies and ideas progressively as you write the plan. It will draw readers into the process and make the ending more unexpected !
- Do start the plan with your financial projections – the more detail and tables the better !
- Don’t summarize the projections – let readers figure out the full-year totals, profits, cash flows and so on for themselves.
- If you include projected balance sheets, make sure that they don’t balance.
- Don’t produce any separate cash flow forecasts, just rename the P&L or income projections.
- Do ensure that your financial projections indicate 40% profit margins in the third year. If raising external capital, do explain that the projected return to investors will exceed 100% per annum within three years.
- Do mention in the marketing section that your proposed offering has no competition. This will save you having to do any market analysis.
- Do base the plan’s marketing section around a few quotes from research reports that you found on the web.
- Don’t consider customer behavior, needs or trends unless you wish to present a series of supportive (unresearched) theories that will support your plans.
- Do base your sales projections on the presumption that you will gain, at least, a 1% share of the total market and don’t bother with any market segmentation.
- Do pad out your sales plan with lots of buzz words like customer-driven, first-to-market, market-led. Do underpin it with a disproportionately small (or large) marketing budget but don’t be too explicit as to how, where and when it will be spent.
- Don’t include any background to your business idea/invention, progress to date or current status.
- Do spend at least ten pages describing your offering – do make this as detailed and technical as possible to impress your readers. Don’t mention any benefits as these should be obvious !
- Do anticipate technical breakthroughs and new offerings but don’t discuss related costs or risks.
- Do include a 6-8 page CV for yourself but don’t worry about building a management team or sorting out operational issues like production, delivery etc. Do make some heroic assumptions about these matters and do pledge to address them at a later date.
- Do spend as little time as possible on the plan but do make sure that it runs to at least sixty pages even if this entails lots of padding and inclusion of superfluous or irrelevant material.
- Do use as wide a variety of font types, sizes and colors as possible to add style to your plan and don’t bother using a spell checker.
- Don’t let a qualified outsider see your emerging plan and don’t bother with reading over or redrafting.
More seriously, if you reverse each Do and Don’t, you’ll have a useful guide for preparing a sound business plan. You can get this list in a printable checklist format at Checklist for Better Business Plans.
For further help, see Insights into Business Planning, Business Plan Guide and the white paper on How to Write a Business Plan.
Post by Brian Flanagan. For more visit www.planware.org/blogSignup to Business Plan Template