Writing a business plan: common mistakes

  1. Construction workers looking at a plan.
    P. Kanjanamukda/iStock
    Melissa Tredinnick

    Melissa Tredinnick UKBF Newcomer Administrator

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    Creating a business plan is one of the first steps taken by many startups.

    Managed successfully, it can give a sense of focus and provide clear objectives for your business, as well as being a valuable tool for persuading potential investors or business partners.

    For those putting together their first business plan, however, there are a few common problems to be aware of.

    Spending too much time on it

    While a business plan should ideally help you to move towards your business goals, the time it takes to write one can end up feeling like a barrier to progress.

    Having run into this issue, UKBF user GannonP said:

    “Each time I sit at my desk I do manage to chip away at it but not as much as I would like. I also become very distracted as the business plan may cause me to question my model and I go off on a research binge.

    “I don’t know if it’s just because I’m new to this or because the business plan is an incredibly laborious task, but it’s putting the brakes on the whole project at the moment.”

    For many business owners, worrying over creating the perfect plan or getting distracted can mean they avoid the task altogether.

    Offering some advice from experience, estwig suggested making a start anywhere in the plan, and avoiding the temptation to procrastinate on research or planning.

    “Don't start front to back,” they said. “Just make a start and the rest will follow. Don't try and be too logical about it and don't try to be super efficient. Just do something, anything, productive.”

    Making it too long

    Mark T Jones said of his own experience of reviewing business plans: “Most of the plans I'm presented are too long, lacking in facts and largely fictitious – investors aren't idiots – so avoid those traps.”

    Recommendations for the page length of a business plan tend to vary. The US Small Business Administration recommends between 30 and 50 pages, while others would argue ten is plenty. Examples provided by British banks tend to sit between 20 and 30 pages, including charts and appendices.

    The exact length of the plan might depend on how complex the business is, and how the information is presented. Essentially, though, your aim is to include the most important details without making your reader – a potential investor, or a bank executive who sees hundreds of business plans every year – start sighing.

    Adding too much detail – or not enough

    Including just the right level of detail in your business plan is a fine balance.

    On one hand, the last thing you want to do is bore your reader with pages of technical information about your business or its products, however interesting or vital that information might seem to you.

    On the other hand, failing to include enough background data can make your plan feel insubstantial and vague. One solution might be to have more detail in a separate facts and figures document, or in an appendix, and cross-reference it in your main plan.

    There are certain core details you should always include, though, such as the way your business operates; your market research; your goals and how you plan to achieve them; and realistic financial forecasts.

    Not knowing why you’re doing it

    Unless a bank or investor has specifically asked for one, you might find yourself wondering if you need a business plan at all.

    Some would point to examples of booming businesses that started without a traditional business plan as evidence that you can manage without one. After all, the authors of the 2012 book Heart, Smarts, Guts & Luck found that around 70% of the successful entrepreneurs they interviewed skipped this supposedly vital step.

    Others might counter that even if nobody else ever reads it, there’s a huge benefit in being forced to go through the thought process. By setting out the way your business works, what you want to achieve in the future and how you’re going to do it, you can start to spot any flaws and, ultimately, determine whether your dream business is really viable.

    If you can achieve that in another format, such as answering a set of key questions or putting together a slide deck, there’s no reason not to take that approach instead. But for someone starting their first business, it makes sense to take a structured approach, in line with traditional best practice.

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  2. Benjamin Tolmer

    Benjamin Tolmer UKBF Newcomer Free Member

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    Hey Melissa, You have described very well. I just wanna addon one point that business plan requires strategizing milestone and benchmark target.
     
    Posted: Apr 8, 2019 By: Benjamin Tolmer Member since: Mar 26, 2019
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  3. The Byre

    The Byre UKBF Ace Free Member

    8,214 3,185
    That's just gobbledygook and definitely not English.

    The following five points are what I look for in a business -

    1. What can I make? What do similar businesses earn in the same area and with the same level of know-how and investment? Is this business scalable?
    2. What can I lose? Interest costs, opportunity cost, depreciation, etc.
    3. What is the USP? Why would customers come to you and not the other guy?
    4. What is plan B? Exactly how do you propose to pull the business around, if the customers stay away in droves? You will have to have this safety net, to lessen the risk.
    5. Says who? Either existing sales or some expert opinions are an absolute MUST on the viability of your plans from such people as market researchers, industry insiders, economists and experienced business people.

    You can write the above five points on the back of an envelope and following a heart-to-heart talk. I've seen businesses succeed and businesses fail. The ones with business plans seem to usually fail!
     
    Posted: Apr 8, 2019 By: The Byre Member since: Aug 13, 2013
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  4. lak13

    lak13 UKBF Newcomer Free Member

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    Dear community, as part of my Masters course I've been tasked with writting a business plan where I have to introduce a service to a company or department and I'm struggling to for ideas and basic direction. I was hoping I could get some suggestions and advice for this group.

    Many Thanks
     
    Posted: Apr 23, 2019 at 3:36 PM By: lak13 Member since: Apr 12, 2019
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