5 common mistakes in writing a business plan

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Whether you're seeking investors, financing or simply keeping a focus on company goals, it's important that you write a business plan.

Here are five reasons you should write a business plan before you start planning to launch your startup. A business plan will help you:

Keep sight of your vision. In the course of starting a business, you might get bogged down by small details and forget some of the larger priorities. Writing a business plan at the start of forming your business helps you capture that vision that can keep as a written reference point.

Obtain an understanding of your market. Exploring the hard data on an industry you are thinking of joining will give you perspective on where you fit into the market and what you have to do to achieve greater market share.

Identify and understand your competition. Doing a deep dive on your competitors may help you realize ways to make your business more successful, or give you ideas on how to improve.

Set goals and benchmarks. A comprehensive understanding of your financials will permit you to set measurable goals and determine what moves you should make at certain times.

Confirm the math. If you have only a vague idea of what you need to be profitable, going through the exercise of putting together a business plan will help you firm up your numbers so you can make smart business decisions.

Writing a business plan at the start of forming your business helps you capture that vision that can keep as a written reference point.

Business plan mistakes to avoid

You want to put your best foot forward when it comes to introducing your business to people who are not already familiar with it. Reading your business plan may be the first interaction that a potential investor, lender or other interested party has with your company. When writing your business plan, you should avoid the following:

Poor grammar and wording. Not every business person is an eloquent writer, but that’s not an excuse for errors in your text. Seek the help of an editor to review the plan, especially if you struggle with grammar and verbiage. Enlist additional reviewers, such as friends, family, business partners, an attorney or a financial advisor to look over the plan for content, as well. An outside observer will help point out where you need to explain things.

An off-putting style. In a professional business plan, you want to show that you know your stuff. This means avoiding conversational, folksy or funny wording. Instead, you want to be authoritative and realistic to prove that you have a handle on your industry and are reliable. Find other ways of portraying your personality throughout the plan, perhaps through your descriptions of key members of your team or in the company description. Don’t be afraid to showcase what sets you apart, but be sure to do so tastefully and professionally.

Sloppy format. Structure the business plan with clear and defined sections that are easily understandable. Font, style, spacing and margins should be kept consistent. Include supplemental materials, like charts or graphs, in such a way that they do not interrupt the narrative you are building.

Being too vague or too detailed. The business plan should display your aptitude and understanding of your business, just enough where you are not burying your reader in detail or leaving something to be desired. This means you need to understand exactly what your reader needs to know. Being too vague will squander that opportunity. If you feel you have too much information, however, you can always attach supporting documents in an appendix.

Assumptions. Business plans are built on facts. Have your research in order so you’re not basing assertions on assumptions. That will make the plan seem thin and will likely not accomplish your goals.

Ignoring risks. Every business plan should address the risks of starting a business head on. Not stating these risks and how you plan to cope with them can make you or your plan seem naive. Include a contingency plan for how to handle changes in the market.

Ignoring the customer. It's important to get across why you love your business, but you have to bring it back to how your business benefits your customers. Not talking about the customer is a huge oversight when developing a business plan.

See our Complete Guide to Writing a Business Plan

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17 Key Business Plan Mistakes to Avoid in 2024

Posted december 6, 2023 by noah parsons.

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. 

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Noah Parsons

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Common Mistakes to Avoid When Writing a Business Plan

Crafting a business plan is a delicate balancing act. It demands a deep understanding of your market, a clear value proposition, realistic financial projections, a competent team, and the flexibility to adapt to changing circumstances. 

All too frequently, an entrepreneur or business owner may lean on a business plan template or outsourced freelancer, bypassing the essential strategic work that needs to go behind it. This often results in a business plan that is generic and lacks the specific details and insights that make the business unique.

Remember, a good business plan is not just a document; it's a reflection of your business idea and strategy. It's an opportunity to delve deep into your business idea, understand your market, define your value proposition, and plan for your business's future.

So, whether you're a first-time entrepreneur with a new business idea or a small business owner looking to expand, here are some common mistakes made during the business planning process.

Insufficient Market Research

Market research is the foundation of business planning. It's the key to unlocking a profound understanding of your target audience, offering invaluable insights that can steer your business decisions. Without comprehensive market research, you risk basing your strategies on assumptions about your customers' needs and preferences, a misstep that can lead to expensive errors and overlooked opportunities.

In the rapidly evolving business landscape, the freshness of your data is paramount. Markets are in a constant state of flux, and data that was accurate a year ago may not hold true today. This is particularly relevant in the wake of the recent pandemic, which has caused seismic shifts across every industry. 

Therefore, it's crucial to not only use the most recent data but also understand the context behind the numbers. This involves analyzing the data in relation to your business goals, industry trends, and market dynamics. It's about asking the right questions: What do these numbers mean for your business? How do they impact your target audience? What opportunities do they present, and what challenges do they pose?

The real value of market research lies in your ability to interpret the data, identify gaps and opportunities, and apply these insights to your business strategy. It's about turning raw data into actionable intelligence that can inform your business decisions.

There's a wide array of tools at your disposal for conducting market research , from free resources to premium platforms. Government resources such as the U.S. Census Bureau can offer a wealth of insights into consumer behavior and market trends. However, for more granular and industry-specific data, you might need to turn to premium sources like IBISWorld or paid industry reports.

Artificial intelligence (AI) has emerged as a potent tool for market research. However, it's important to exercise caution when using AI for data collection. Even advanced AI tools like ChatGPT-4, with the aid of browser plugins, can sometimes provide inaccurate data. Therefore, always cross-verify the sources and accuracy of the data obtained from AI. Remember, a single oversight in your market research can undermine the credibility of your entire business plan.

Where AI truly shines is in its ability to analyze vast amounts of data swiftly and accurately, revealing patterns and trends that might be challenging to discern manually.

Beyond online research, don't underestimate the power of direct interaction with potential customers. Conducting surveys or simply engaging in conversations can offer firsthand insights into your customers' needs and preferences, often revealing valuable information that isn't readily available in online data.

Ignoring Your Target Customer

Your target audience is the lifeblood of your business. They are the people who will use your product or service, advocate for your brand, and ultimately drive your revenue. Therefore, it's crucial to understand who they are, what they need, and what they value.

Start by creating customer personas . These are detailed profiles of your ideal customers, including demographic information, interests, pain points, and buying behavior. This will help you understand your customers' needs and preferences, allowing you to tailor your business plan to meet these needs .

However, understanding your customer is only half the battle. The other half is communicating how your product or service meets their needs and adds value to their lives. This is where understanding your unique value proposition comes into play.

Your value proposition is what sets you apart from your competitors and persuades customers to choose your product or service. Highlight the unique benefits that you offer, such as superior quality, convenience, or affordability. Use clear, concise language that resonates with your target audience. Your value proposition should be the cornerstone of all your marketing efforts, from your website copy to your social media posts.

Neglecting Competitive Analysis

In the realm of business, being unaware of your competitors is a recipe for disaster. Overlooking your competitors can leave you unprepared and unable to counter their strategies effectively. As such, a comprehensive competitive analysis should be a fundamental part of your business plan.

Begin by pinpointing your primary competitors. Scrutinize their products or services, pricing strategies, marketing approaches, and customer feedback. This analysis will help you comprehend their strengths and weaknesses, and identify opportunities for differentiation.

Digital tools can be a great help in this regard. For instance, you can use AI tools like ChatGPT-4 to analyze a competitor's website and summarize its products, services, and unique value proposition. This can give you a clear idea of how your competitors position themselves in the market.

Next, delve into what customers are saying about your competitors. Online reviews on platforms like Yelp! or Google Reviews can provide invaluable insights into what customers like and dislike about your competitors' offerings. This can help you identify gaps in their products or services that you can fill.

If the competitor has a brick-and-mortar location, pay it a visit. Use your powers of observation and take note of their customer service, the arrangement of their store, their product presentations, and any other aspects that could provide insights into their operations. If your business offers a service, consider reaching out to competitors as a potential customer. This can provide valuable information about their pricing structure and sales approach.

Numerous entrepreneurs succumb to the misconception that they have no competitors because their idea is genuinely innovative. Even if your offering is revolutionary, your potential customers are currently allocating their resources elsewhere. This concept aligns with the "Jobs to Be Done" theory, which posits that customers "hire" products or services to perform specific "jobs" or fulfill certain needs. Therefore, you're competing with whatever your potential customers are currently "hiring" to do the job your product or service aims to do, whether it's a similar product, a different solution to the same problem, or even an entirely different product that accomplishes the same job. These constitute your indirect competitors, and comprehending them is just as vital as understanding your direct competitors.

By meticulously examining your direct and indirect competitors, you can start to identify areas where you can distinguish yourself. Your competitive edge lies in the unique traits or abilities that make your business outshine others in your market. This advantage could be derived from your groundbreaking technology, exclusive processes, exceptional team, or a strong brand reputation.

To convey your competitive advantage, your business plan must express how you plan to capitalize on it. This could involve showcasing your innovative technology, underscoring your team's expertise, or demonstrating your brand's solid reputation. Remember, business is a competition, and your goal is to win by convincing customers to choose you over your competitors.

Forgetting The Goal

Different stakeholders have different expectations and requirements from a business plan. For instance, a bank looking at your business plan for a loan application will have different criteria than a potential investor considering an equity investment.

A bank is primarily concerned with your ability to repay the loan. They will focus on your financial projections, cash flow, and collateral. They want to see that your business is stable and has a reliable source of income to service the debt. Therefore, when writing a business plan for a bank , you should emphasize your financial stability and risk management strategies.

On the other hand, an investor is looking for growth potential and a return on their investment. They are interested in your business model, market opportunity, competitive advantage, and exit strategy. They want to see that your business has the potential to scale and deliver a significant return. Therefore, when writing a business plan for an investor , you should highlight your growth strategy and potential return on investment.

Your internal strategic plan, however, serves a different purpose. It's a tool for setting your business goals, defining your strategies for achieving them, and identifying metrics for measuring your progress. It's more detailed and operational than a business plan for external stakeholders. It includes specific tasks, responsibilities, and timelines. Therefore, when writing an internal strategic plan, you should focus on your operational plans and key performance indicators (KPIs).

The language and tone of your business plan should also be adapted to your audience. A business plan intended for a bank or potential investors should be formally written and highly professional, while an internal strategic plan can be more straightforward, using bullet points and an iterative approach that allows for adjustments as needed.

Finally, consider how you'll present your business plan. Banks may not require a highly visual presentation and might prefer a more traditional, text-heavy document. Investors, on the other hand, value more impact, such as a pitch deck or a well-designed executive summary that can help them quickly understand your business model and growth potential.

Being Unrealistic About Your Financial Projections

When it comes to financial projections, achieving a balance between optimism and realism is key. It's crucial to demonstrate to investors that your business has the potential for success, but it's equally important to show that you have a clear understanding of the market and your financials. Overly optimistic projections can raise red flags for investors, leading them to question your financial management skills and decision-making abilities. Conversely, overly conservative projections may make your business appear less appealing and unlikely to yield substantial returns.

Thorough research, market trend analysis, and expert consultation are crucial to creating realistic and achievable financial projections that align with your business goals. By doing so, you gain confidence from lenders and investors and increase the likelihood of securing funding for your business.

To estimate your revenue, consider factors like your pricing strategy, sales volume, and market size. It's important to be conservative in your estimates and consider a sensitivity analysis with best-case and worst-case scenarios.

When forecasting your revenue, consider whether to a bottom-up or a top-down approach . A bottom-up approach starts with the unit sales (like a single product sale) and scales up, while a top-down approach starts with the total market size and estimates what portion of that market you can capture. Both approaches have their merits and can provide valuable insights when used together.

Fixed expenses, such as rent and salaries, remain constant regardless of your business activity, while variable costs, like raw materials and shipping, fluctuate depending on your business activity. By accurately estimating your revenue and expenses , you can create a realistic budget that helps you avoid financial pitfalls.

Don't stop with just the financial forecast, because that alone is only part of your financial health. Your cash flow projection should include your expected cash inflows from sales and other sources, and your expected cash outflows for expenses and investments. This will help you anticipate periods of negative cash flow and plan for contingencies.

In your financial planning, be sure to assess the company's break-even point, which is when your total revenue equals your total costs, and demonstrates the point at which your business becomes profitable. 

Neglecting the Importance of Your Team

Your team members are more than just employees; they are the catalysts propelling your business's growth and development. When investors, lenders, and other stakeholders scrutinize your business plan, they are looking for a team that is not only skilled and experienced but also cohesive and committed.

Begin by introducing each key team member. Include their name, role, and a brief biography that highlights their relevant skills and experience. The qualifications of your team should extend beyond their educational background and work history. Emphasize their unique "soft skills" and other talents that make them indispensable to your business. Consider their history of success and how their past experiences can contribute to the growth of your business.

Moreover, the cohesion of your team is equally significant. Illustrate how your team members' skills complement each other and how they work collectively to achieve your business goals.

If you haven't assembled your team yet, discuss your plans for recruitment and training. Outline the qualities and skills you're looking for in potential team members, and explain how you plan to attract and retain top talent. Discuss your strategies for fostering a positive and productive work environment, and how you plan to train your team to ensure they have the skills and knowledge needed to succeed.

Thinking Your Business Plan is Done

Your business plan is a dynamic document that should mirror your evolving business reality and market conditions. It's not a one-off task, but an ongoing process that demands regular review and revision.

To ensure your business plan remains pertinent and effective, it should be reviewed and updated regularly. Establish a review schedule, such as quarterly or annually, and adhere to it. During each review, evaluate your progress towards your goals, identify any shifts in your market or industry, and adjust your strategies accordingly.

Market trends fluctuate, new technologies surface (looking at you AI), and customer preferences change. Keep your finger on the pulse of market trends and disruptions, and be prepared to seize new opportunities as they emerge. This could involve embracing new technologies, penetrating new markets, or pivoting your product or service. By being proactive and adaptable, you can convert market changes and opportunities into a competitive edge.

If your current strategy isn't working, or if new opportunities arise, your business plan should guide you in knowing how and when you need to pivot . This might involve changing your target market, adjusting your product or service, or adopting a new business model. By being flexible and responsive, you can ensure your business remains competitive and resilient in the face of change.

By steering clear of these common mistakes, you can craft a business plan that is comprehensive, compelling, and convincing to your stakeholders. A well-constructed business plan not only aids in attracting funding and customers but also serves as a roadmap for your business's success. Invest the time to do it right, and your business will reap the rewards.

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How to Write a Business Plan: Step-by-Step Guide + Examples

Noah Parsons

24 min. read

Updated April 10, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

• The basics of business planning

If you’re reading this guide, then you already know why you need a business plan . 

You understand that planning helps you: 

• Raise money
• Grow strategically
• Keep your business on the right track 

As you start to write your plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After completing your plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

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• What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

• A summary of the problem you are solving
• A description of your product or service
• An overview of your target market
• A brief description of your team
• A summary of your financials
• Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

This is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

The operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

• Supply chain management
• Manufacturing processes
• Equipment and technology
• Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

• A description of each task
• The proposed due date
• Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

• Website launch date
• Store or office opening date
• First significant sales
• Break even date
• Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

• Conversion rates
• Customer acquisition costs
• Profit per customer
• Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

• Sole proprietor
• Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

Last, but certainly not least, is your financial plan chapter. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

• Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
• Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
• Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
• Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
• Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

• Company logo
• Business name
• Value proposition (optional)
• Business plan title
• Completion and/or update date
• Address and contact information
• Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI for your business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

• Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information to include in a business plan is sometimes not quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

There are plenty of great options available (we’ve rounded up our 8 favorites to streamline your search).

But, if you’re looking for a free downloadable business plan template , you can get one right now; download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

• Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
• Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
• Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
• Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
• Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

• Did you meet your sales goals?
• Is spending following your budget?
• Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

Free business plan templates and examples

Kickstart your business plan writing with one of our free business plan templates or recommended tools.

Free business plan template

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One-page plan template

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Sample business plan library

Explore over 500 real-world business plan examples from a wide variety of industries.

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How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

• Write a brief executive summary
• Describe your products and services.
• Conduct market research and compile data into a cohesive market analysis.
• Describe your marketing and sales strategy.
• Outline your organizational structure and management team.
• Develop financial projections for sales, revenue, and cash flow.
• Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

• 1. Not taking the planning process seriously.
• Having unrealistic financial projections or incomplete financial information.
• Inconsistent information or simple mistakes.
• Failing to establish a sound business model.
• Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

• How will your business make money?
• Is there a need for your product or service?
• Who are your customers?
• How are you different from the competition?
• How will you reach your customers?
• How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering.

Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix.

Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

What’s the difference between a business plan and a strategic plan?

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

• Use AI to help write your plan
• Common planning mistakes
• Manage with your business plan
• Templates and examples

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10 Common Business Plan Writing Mistakes

The reality is a professional business plan can take several revisions before it’s completed. Before you move ahead with your business plan read these common mistakes to avoid, and make note of our business plan writing suggestions.

1. No Market Research

This is the invisible mistake! Your business plan might look perfect, but when you go to implement it you’re wondering where all your customers are.

It’s an incredibly good idea to perform market research prior to investing in a business plan. Not many people do, because well, they’re excited, they’re extremely confident in their concept, or they don’t understand the importance of market research.

Market Research Example

Let’s take Ella for example.

Ella wants to create a virtual wedding planning business. Instead of just starting her business plan she wants to make sure that there’s a market for virtual weddings. In order to perform an unbiased market research study, she creates a multiple-choice questionnaire for 100 different couples that have got engaged in the past 3 months.

The questionnaire asks:

What sort of wedding do you plan on having?

A) Conventional B) Destination C) Open To Ideas

How much would you like to spend on your wedding?

A) 0 – $2,000 B) $2,000 – $10,000 C) $10,000 +

Would you consider having a virtual wedding for less than $2,000?

A) Yes B) No

Out of the 100 couples, a whopping 60% were open to ideas other than a conventional or destination wedding. 55% would like to spend 0 – $2,000. Although, when asked the most crucial question: Would you consider having a virtual wedding for less than $2,000? Only 1 couple responded yes.

Some may look at that as 1% of the entire wedding market, but Ella decides it could as easily have been 2% or even 0%. Instead of using her hard earned money to develop a business plan and invest in the company, she decided to walk away from this opportunity.

Market research can take time, money, and can be a serious downer if you find out there isn’t a market for your business concept. You don’t necessarily have to, but it’s an excellent idea to prove the market viability of your concept before you invest your time, money, and energy.

2. Long-Winded Writing

Sentences that never seem to end. This is an excellent way to bore your audience and make them lose interest in a perfectly good concept.

What are entrepreneurs thinking? It’s pretty clear: “Filling up my business plan with lots of words will benefit me because it shows my audience that I can write lots, and therefore my business plan will be successful.”

Hold on a minute.

Less is More

Go into writing your business plan with the mindset that you need to use the least amount of words possible. This will force you to simplify your writing and refine each segment of your plan.

Your audience and your future self will love you for this!

Let’s take a common part of your business plan for example the mission and vision statement. The best mission and vision statements are condensed into a few words; subsequently, providing more impact. Below we’ll provide a few sample mission statements. Honestly, which is more impactful?

Long-Winded Mission Statement

Facebook: “Founded in 2004, Facebook’s mission is to give people the power to build community and bring the world closer together. People use Facebook to stay connected with friends and family, to discover what’s going on in the world, and to share and express what matters to them.”

Short but Impactful Mission Statements

Tesla: “To accelerate the world’s transition to sustainable energy.”

Harley Davidson: “We fulfill dreams of personal freedom.”

Disney: “Creating happiness through magical experiences.”

Just Write Clean!

By “writing clean” we mean to leave all the junk out. Condense your writing into what is necessary. In doing this, you as the business owner will understand which parts of your business are essential, and once you have the essentials you can expand on what is necessary to eloquently present your business.

2. No Competitive Advantage

Look, you’re only cheating yourself on this one. If you can’t clearly articulate what separates your business from your competition you will have a losing business plan.

What’s a Competitive Advantage?

A competitive advantage may also be described as a business strategy, unique selling point, unique selling proposition, unique value proposition, point of difference, unique offering, or unique perceived benefit. At the end of the day, all of these terms point to a “unique offering, competitive advantage, or differentiator” to the competition.

In order to develop a defendable competitive advantage, you first must develop a competitor analysis. Your competitor analysis will divide your industry into different segments, separating your competition by which division they fall under. Once you’ve divided your competitors into each market segment you must identify each of their unique offerings. Once you’ve done this you need to come up with an authentic competitive advantage for your business.

What are the 3 Business Strategies (Competitive Advantages)?

A) Cost Leadership: Wal-Mart is the greatest example of this. Wal-Mart’s prices “can not be beaten”. They have cemented a position as the cost leader of retail. We don’t recommend taking a position in cost leadership as it is extremely challenging to be a championed cost leader. Here’s why: when you have a few companies competing for cost leadership status it is often a race to zero, also known as a zero-sum competition.

B) Differentiation Strategy: The most commonly taken approach. Offering a different style of service, or a product that provides something distinct. Here’s a great example: Apple Inc. Apple has flawlessly differentiated their products by focusing on user-friendliness while using intelligent design.

C) Focus Strategy: A focus strategy chooses a demographic then reinvents products and services to meet the evolution of the chosen demographic. A prime example of a focus strategy would be Toys “R” Us. This company focuses on selling toys to kids. Rather than developing a product or service that is different their strategy is to hone in on their demographic by selling the most up to date products that will meet their evolving needs.

You need a competitive advantage (business strategy) in order to ensure the long-term success of your business.

3. Missing a SWOT Analysis

A SWOT Analysis identifies a company’s internal strengths and weaknesses (SW) and external opportunities and threats (OT) = SWOT Analysis. The best part about this is showing your audience that you can be truthful about two “negatives” being weaknesses and threats.

A business plan full of hype is a poor business plan. Your plan should be clear, evidence-based, and honest. By executing a proper SWOT Analysis you will not only impress your audience, but you will enable yourself to work on your weaknesses and prepare yourself for future threats.

At a minimum, you should aim to have at least 5 solid points for each segment. For further clarification don’t have 10 points for strengths, 1 weakness, 8 opportunities, and 2 threats. It is easy to identify lots of positives, but it takes transparency to identify equal positives and negatives; therefore, have at least 5 points for your strengths, weaknesses, opportunities, and threats.

4. Having One Management Team Member

Have you ever watched DragonsDen or Shark Tank? “What will I ever do if you get struck by lightning?”

Nobody wants to loan money or invest in a business that is owned and operated by one sole person. You need a succession plan, by having at least two capable management team members.

“But I can’t, I’m the only person involved.” There is always someone capable to be your co-pilot; it’s just a matter of putting it out there to the universe and going for it.

In our experience, having clients look for another management team member is one of the best parts of the process. It’s incredible how many people have a wonderfully qualified management team member close by, and never realize it.

By having at least two qualified, management team members you show potential investors and financiers that your business will continue regardless of whether you or your co-pilot are leading the team. An essential piece to securing the most strategic of investments or bank loans.

5. Unreasonable Financial Projections

Financial projections for a startup is like asking a kindergartner what they’re going to do with the rest of their life. Alright, that might have been a bit extreme, but hopefully, you get the point.

Look, every startup wants to believe that their financial forecast is promising, and I’m not saying that it can’t be. The majority of business plans portray their financials to be stronger than they actually are, so expect to be classified as a business that grossly overestimates their financial future. Moreover, you need to explain precisely why your financials will meet specific revenue, sales, or earnings projections.

Instead of being optimistic, you should be realistic.

Perform market research to justify how many people out of the number you reach will be interested in your product or service, and how many will actually move ahead with paying their hard-earned money for it. Unfortunately, your Mom doesn’t count.

6. Outdated Business Plans

Hey, your business plan for that store that sells stuff online might be a little out of date.

In our business plan review service, we come across this all the time.

Once completed, your business plan should be updated every quarter (3 months). The same rule applies to a new business concept. Any longer than 3 months and you need to review and revise the plan.

Remember, your plan might be completed but the economy is still moving, so what may have been a revolutionary idea can turn into old news within a matter of months. Keep your business plan fresh, and get it in motion.

7. Poor Presentation

When it comes to the presentation of a business plan I can honestly say that our Creative Director develops the best business plans available. Look, that is the icing on the cake. You don’t NEED the best business plans available to receive an investment, but it absolutely helps.

The presentation of your business plan is imperative. If the presentation is clean you’ll show that you’re organized. If the presentation is sloppy you’ll show that you’re disorganized. Honestly, who wants to work, invest, or lend money to someone who is disorganized when you don’t have to?

This doesn’t even take that much effort. Just ensure the continuity of spacing, fonts, borders, and color themes throughout the plan. As a rule of thumb: “less is more”. Make the design as clear and eligible as possible so your audience can read right through it.

8. Overly Detailed

To be clear: investors and financiers are looking for the goldilox business plan – not too long, detailed and not too short, unexpansive.

Going back to “Mistake 2. Long-Winded Writing” the paramount step is to write clearly and coherently. No dead weight, or loose ideas. Here’s the thing about clear and detailed writing: you need to know where to expand, and where to stop.

As a rule of thumb, your business plan should be no longer than 15 – 20 pages of text, which equates to around 3,500 – 5,000 words. Remember, that’s the long version; unless you’re writing a business plan for NASA.

So considering that “standard business plan size” you should be able to include an executive summary, mission statement, vision statement, company summary, market analysis, competitor analysis, market growth rate, business model, unique selling point, business pipeline, marketing strategy, key channels, financial projections, opening balance sheet, income statement, profit/loss statement, management team, key personnel, compensation summary and references within 15-20 pages.

9. Unreliable Sources

In nearly every business plan you’ll reference data to build your case and develop projections.

What are credible sources for your business plan?

www.wikipedia.com

https://www.statcan.gc.ca/eng/start

https://www.bloomberg.com/canada

https://www.economy.com/canada/indicators

www.ibisworld.com

https://data.worldbank.org/country/canada?view=chart

Unfortunately, we come across business plans that quote experts on quora, answerbag, and yahoo answers. This is the equivalent of quoting your great aunt’s political views from last year’s Christmas dinner!

The lesson here: use reliable, credible, trusted sources that will instill trust in your audience.

10. No Management Team Pictures

Your audience can build so much trust by just seeing a picture of you! So many people are concerned about what they look like to the point that they refuse to use a headshot photo. It doesn’t necessarily need to be anything fancy. Just take a picture of you being you. You have so much to gain, and well not much to lose at all. No one is going to judge you. The absence of a headshot photo is the real concern.

To Conclude 10 Common Business Plan Writing Mistakes

We hope this article sheds some light on what not to do, but also what you can do to create a winning business plan. Your business plan won’t be perfect, but by reading this article, and editing your plan you should get close to it.

We like to think of our clients as experts in their area, and us as experts in management consulting. Having a firm such as ours develop your business plan will likely be the best investment you’ll ever make; a business plan that is concise, implementable, and appealing to the senses.

Best of luck with your business plan. We’ll speak with you soon.

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Seven Common Business Plan Mistakes

Though every small business is unique, many successful ones start with a common foundation: a business plan. Researching and writing a business plan is an important step in laying out the road map your business will travel, and an indispensable step in securing funding for startup costs or growth. Save time and energy by avoiding these common business plan mistakes.

Seven top business plan mistakes:

1. Not making one

As an entrepreneur, surely you’re more excited about doing the thing you want to do that writing a plan about it. But recall the wisdom of Yogi Berra: “If you don’t know where you’re going, you’ll end up somewhere else.” Without a plan, you’re likely to spend valuable time and energy pursuing fruitless paths and spreading yourself thin. Make completing your plan a priority to focus your energy, stay on the right path, and improve your chances of landing a small business loan.

2. Being unrealistic

This can happen on a number of fronts if you’re not willing to ask hard questions, do concrete research, and be honest with yourself. Your business plan can’t represent the best case scenario or the way you hope things go: it has to grapple with the reality of the marketplace, financial truths, and the entrepreneurial landscape. Focus on being realistic in a few key areas:

• Financial projections:  Don’t pad or overinflate your future earnings projections. At best, you’ll look like you don’t know what you’re doing and a bank won’t trust you enough to lend you money. At worst, they’ll lend you the money and you’ll go into default or bankruptcy.
• Competition:  A big red flag in many business plans is a belief that you have minimal competition — or even none. “You’re always competing for dollars,” said RISBDC counselor Manuel Batlle. Even if your product is unique, your target customers still have choices about what to do with their money. You must address how you will persuade your target market to give their dollars to you .
• Market research:  It doesn’t matter what you want to build or sell. Someone has to be willing to buy it for a price that makes it worth selling. No business plan is complete without investing time and energy in up-to-date market research to truly understand market trends, customer interest, competitor performance, and other aspects of product or service viability.
• Customer base for brick and mortar businesses:  Your mother may be willing to drive across the state to buy a soda from you, but probably no one else will. For many products and services, your customers are going to be local. Particularly in Rhode Island, customers may be  searching within walking distance, or a 5-10 minute drive. Dig deep into the census information on demographics in your area and be realistic about how many target customers are within buying distance.

3. Poor executive summary

A lender will read your business plan’s executive summary and “give it the sniff test, then the gut test,” said RISBDC business counselor Josh Daly. The lender may decide whether or not to continue reading based on what their intuition tells them. So the executive summary is worth focusing on. Someone without a deep business background should be able to understand it, and it should make the case that your business is viable in short, clear points. Daly recommends 1-3 sentences each on your business background, customer base, the market, the competition, your qualifications, and your team. A concise summary should fit into about two pages and convince your audience to keep reading. If your plan is focused on securing financing, prospective lenders should immediately know how much money you are looking to borrow and how the money will be used.

4. Too long

For a majority of small businesses, a succinct and well-organized business plan should be 5-10 pages long. An engaging business plan includes visuals, where appropriate, to avoid wordiness when a graph, chart, or map will tell the story more effectively. Additional supporting financial projections or research data can go in an appendix. Plans that are significantly longer don’t necessarily give more or better information, and they risk losing their audience before they’re actually read.

5. Not backing up what you say

Along with being realistic in discussing your projections and your market research, you also need to make sure you’re using data and references — not just anecdotes — to support what you’re claiming.

6. Not focusing on the team, and your role as the head

No small business owner has every skill and personality trait needed to take a business all the way from the seed of an idea, to the world, all by him or herself. It’s appropriate and important to identify and address gaps in your experience and education, and explain how you’ll overcome them. It’s also crucial to briefly introduce your top team members, sell their contributions to your company, and portray how together, your team is well-rounded and ready to tackle the challenges ahead.

7. Sloppy mistakes

Typos, grammatical errors, and poor formatting are completely avoidable enemies, taking the shine off your first impression. Your business plan needs to look professional because it’s going to speak for you. Use spell-check. Re-read your plan. Get lots of sleep and re-read it again. Then, even if you’re a great writer and a stickler for detail, have someone else check it over for things you’ve missed. Never underestimate the value of a pair of fresh eyes.

Though you should be ready to put time and effort into your business plan, you don’t have to do it alone. The RISBDC offers workshops and no-cost, one-on-one business counseling to help you refine your plan and take the next steps toward business success.

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5 Common Business Plan Writing Mistakes

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A well-crafted business plan is the cornerstone of any successful venture. It serves as a roadmap, guiding entrepreneurs through the process of conceptualization, planning, and execution. However, despite its importance, many business owners fall prey to common writing mistakes that can undermine the effectiveness and impact of their business plans. In this article, we’ll explore five of the most common business plan writing mistakes and how to avoid them.

Learn more: Being a Business Plan Writer Provides Invaluable Experience, Paving the Way for a Variety of Opportunities

• Lack of Clarity and Conciseness

One of the most prevalent mistakes in business plan writing is a lack of clarity and conciseness. Entrepreneurs often inundate their business plans with excessive detail, jargon, and technical language, making it difficult for readers to grasp the key points. A cluttered and convoluted business plan can obscure the underlying vision and objectives of the venture, leading to confusion and disengagement.

Solution: Focus on clarity and conciseness when crafting your business plan. Clearly articulate your business concept, objectives, and strategies in simple and straightforward language. Avoid unnecessary technical jargon and industry-specific terms that may alienate readers. Use bullet points, headings, and subheadings to organize information and enhance readability. Remember, brevity is key—concisely convey your message without sacrificing substance.

• Neglecting Market Research and Analysis

Another common mistake is neglecting thorough market research and analysis. Many entrepreneurs fail to conduct comprehensive research into their target market, industry trends, competitive landscape, and customer preferences. As a result, their business plans lack the depth and insight necessary to make informed decisions and effectively position the venture in the marketplace.

Solution: Prioritize market research and analysis when developing your business plan. Gather data on market size, demographics, trends, and competitor behavior to gain a holistic understanding of the business environment. Conduct surveys, interviews, and focus groups to gather insights from potential customers and validate your business assumptions. Use this information to identify opportunities, assess risks, and refine your business strategy accordingly.

• Unrealistic Financial Projections

A common pitfall in business plan writing is the inclusion of unrealistic financial projections. Entrepreneurs often overestimate revenue potential, underestimate expenses, or fail to account for unforeseen costs and challenges. Inflated financial projections can erode credibility and undermine investor confidence, jeopardizing the viability of the venture.

Solution: Develop realistic and conservative financial projections based on thorough research and analysis. Use industry benchmarks, historical data, and comparable businesses to inform your revenue forecasts, expense estimates, and cash flow projections. Consider various scenarios and sensitivity analyses to account for potential fluctuations in market conditions and business performance. Be transparent about your assumptions and methodologies to build trust with stakeholders.

• Lack of a Strategic Marketing Plan

Many business plans overlook the importance of a strategic marketing plan, focusing solely on product development or operational considerations. However, without a clear marketing strategy, even the most innovative products or services may struggle to gain traction in the marketplace. A lack of strategic marketing planning can result in ineffective promotion, limited brand awareness, and missed opportunities for growth.

Solution: Integrate a strategic marketing plan into your business plan to effectively promote your products or services and reach your target audience. Define your target market segments, positioning, messaging, and distribution channels. Develop a comprehensive marketing mix that includes digital marketing, social media, content marketing, public relations, and advertising. Set measurable goals and KPIs to track the effectiveness of your marketing efforts and adjust strategies as needed.

• Failure to Address Risks and Contingencies

Another common mistake is the failure to address risks and contingencies in the business plan. Entrepreneurs often focus on the upside potential of their venture while overlooking potential pitfalls and challenges. Ignoring risks can leave the business vulnerable to unexpected events and setbacks, undermining its resilience and long-term sustainability.

Solution: Conduct a thorough risk assessment and incorporate risk management strategies into your business plan. Identify potential risks and uncertainties that may impact the success of your venture, such as market volatility, regulatory changes, competitive threats, and operational disruptions. Develop contingency plans and mitigation strategies to address these risks proactively. Communicate your risk management approach clearly in your business plan to reassure stakeholders and demonstrate your preparedness for potential challenges.

Learn more: Plan the Launch & Growth of Your Business with Expert Business Plan Writers

Avoiding common business plan writing mistakes is essential for creating a compelling and effective roadmap for your venture. By prioritizing clarity and conciseness, conducting thorough market research, developing realistic financial projections, crafting a strategic marketing plan, and addressing risks and contingencies, entrepreneurs can enhance the quality and impact of their business plans. Remember, a well-crafted business plan not only serves as a guide for your own decision-making but also as a tool to attract investors, lenders, and other stakeholders who can help turn your vision into reality.

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9 Common Mistakes When Writing Your Business Plan

Writing a business plan is a critical step in turning your business ideas into reality, but it's not without its challenges. Many entrepreneurs, especially those without formal business training, can fall into common traps that weaken their business plans.

While many entrepreneurs and wantrepreneurs wonder how to write a business plan that doesn't cost a fortune, the most important idea here is that a well-written business plan should not just be a mere document; it's a reflection of your understanding of the market, your strategy, and your vision for the future. Hence, avoiding the typical mistakes can be the difference between a plan that persuades investors and one that falls flat.

In this article, we dive deep into nine frequent mistakes people make when writing their business plans.

• Being Overly Vague or General
• Ignoring the Competition
• Overestimating Revenue Projections
• Underestimating Financial Requirements
• Not Being Able to Pitch Your Financial Projections
• Lacking Market Research
• Inconsistent or Unrealistic Strategy
• Neglecting to Plan for Contingencies

Failing to Provide the 10 Key Components of a Winning Business Plan

• Bonus Mistake: Getting the structure of your business plan wrong!

Because we know the impact of a well-drafted business proposal on investors, we aim to help you recognize and steer clear of these pitfalls, ensuring your business plan is not only robust but also compelling to those who read it.

Whether you are drafting your first business plan or refining an existing one, this guide will provide valuable insights to strengthen your approach.

A nd should you want to find out more about how to get your business plan written make sure to secure your copy of  our eBook " Business Plan Blueprint: Cash-In For Real! " .

1. Being Overly Vague or General

One of the main pitfalls in writing a business plan is the lack of specificity.

A strong business plan should clearly articulate specific goals, strategies, and actions. This means going beyond general statements and providing detailed information about your market, products, and operational plans.

It is also crucial to outline measurable objectives and how you plan to achieve them - investors and lenders need to see that you have a clear vision and a detailed roadmap to success, otherwise what are their odds of ever getting their money back?

2. Ignoring the Competition

Every business operates within a competitive landscape, and failing to acknowledge and understand your competition is a significant and frequent oversight.

Your business plan should therefore include a thorough analysis of your competitors, highlighting their strengths and weaknesses. It should explain how your business will differentiate itself in the market.

This shows potential investors that you are aware of your market environment and are prepared to face competition effectively. If not, they will just consider that you are driving blind, which means the end of the story before anything even started!

3. Overestimating Revenue Projections

Just as underestimating expenses can be harmful, overestimating your revenue can also mislead investors and stakeholders. The issue is frequent as a lot of entrepreneurs think that making investors dream is a matter of exagerating the potential of their business - but are investors and lenders that stupid?

Of course not!

So, it's important to base your revenue projections on realistic, data-driven assumptions.

Conduct market research to support your sales forecasts. And remember, it is better to be conservative and realistic in your projections than overly optimistic.

4. Underestimating Financial Requirements

A common and related mistake is not accurately forecasting financial needs.

Your business plan should include detailed financial projections, including startup costs, operating expenses, revenue forecasts, and break-even analysis.

Underestimating the amount of capital required can lead to financial strain or the inability to pursue crucial business opportunities. Here as well, you'll want to be realistic and provide a comprehensive financial plan that demonstrates your understanding of the financial aspects of your business.

5. Not Being Able to Pitch Your Financial Projections

It's not enough to have financial projections; you need to be able to explain and defend them!

This means understanding the assumptions behind your numbers and being prepared to discuss them in detail - which obviously is only possible if you have built your financial projections yourself. Never ask someone else to do the job for you!

>>  Don't miss our eBook " Crafting Financial Projections That Make Your Cash Flow! "!

Investors often scrutinize financial projections, and your ability to confidently discuss and justify these figures is crucial. Be prepared to answer questions about your pricing strategy, cost structure, sales forecasts, and how you arrived at these numbers.

6. Lacking Market Research

Skipping thorough market research is a critical mistake in business planning.

To the contrary, your plan should demonstrate a deep understanding of your target market, including customer demographics, preferences, buying behaviors, and market trends.

This research forms the basis for your marketing and sales strategies and shows that you understand the needs and wants of your customers.

7. Inconsistent or Unrealistic Strategy

A business plan with strategies that are not aligned with the company's capabilities or market reality can raise red flags for investors. For that reason, you'll really want to ensure that your strategies are feasible and consistent with your resources and market conditions.

This includes your marketing, operational, and growth strategies. They should all be realistic and achievable, given your current and projected resources.

8. Neglecting to Plan for Contingencies

No business plan is complete without a contingency plan but many entrepreneurs get themselves burnt when they aren't able to explain what B plans they have should anything go wrong.

To solve the issue, it is essential to acknowledge and prepare for potential risks and challenges.

This could include changes in market conditions, competitor actions, or operational setbacks. Showing that you have considered and planned for potential risks demonstrates a level of foresight and preparedness that is crucial for any successful business.

A comprehensive business plan should include the 10 essential components that investors look for. If you miss any of these components, your plan may fall short.

These components, as detailed in our previous article " Top 10 Essential Components of a Winning Business Plan ," include the executive summary, company description, market analysis, and others. Ensure your business plan is complete by including each of these critical elements - read our article to find out more.

Bonus Mistake: Getting the Structure of Your Business Plan Wrong!

In conclusion, a well-thought-out and researched business plan is your roadmap to success. Avoiding these common mistakes can significantly increase your chances of attracting investors and achieving your business goals.

There is one more mistake to avoid however: getting the structure or your business plan wrong!

Having the right structure is crucial for your business plan, and seasoned investors will expect yours to follow a very specific structure.

This is because a well-structured plan guides the reader through your vision, strategy, and financial expectations in a logical and cohesive way that tells a story people can understand, relate to, and repeat.

When the structure is off, however, it can lead to confusion, misinterpretation, or even a lack of interest from potential investors or stakeholders. Avoid this mistake by ensuring your business plan follows a clear and recognized format 

If you are looking for more in-depth guidance and tips on how to structure your business plan properly, our eBook " Business Plan Blueprint: Cash-In For Real " has more tips and will provide you the guidance you need. It can really help you turn your business idea into a real plan that works - check it out to start your business the right way!

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Avoid Common Mistakes When Writing a Business Plan

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Introduction

A business plan is an essential document that outlines the strategy and objectives of a business. It is a written document that describes the business, its financial projections, and its plan for achieving long-term goals. There are many potential pitfalls when it comes to writing a successful business plan. From complicated financials to incomplete sections, avoiding potential mistakes is key in creating an effective and accurate business plan.

Having an accurate and comprehensive business plan is critical for the success of any business. A comprehensive business plan outlines the long-term goals, marketing strategies, and operational objectives that will guide the business and help it to reach its stated goals. A well-crafted business plan helps business owners to anticipate potential pitfalls and implement solutions before they can become a problem. It also helps to find potential investors who may be interested in the business.

However, there are some common mistakes to avoid when writing a business plan. Here are some of the most frequent errors that business owners make when creating a business plan:

Common Mistakes when Writing a Business Plan

Writing a business plan can be a complex process, but experienced business owners can often rely upon general practices to meet their needs. Unfortunately, several common mistakes remain frequently made, leading to waste of time, money, and resources. Knowing these mistakes and taking steps to avoid them can help anyone create a successful business plan.

Not Including an Executive Summary

The most important aspect of any business plan is the executive summary. This brief overview of the document should act as an introduction to not only the plan but five business itself. Within the summary, the reader should gain an overview of the purpose, services, major products, the market, competition, finances, and management team. Failing to include this summary can be costly, as potential investors are far more likely to read this before any other part of the plan.

Not Researching Potential Investors

When writing a business plan, whether you plan to seek outside investors or make attempts to fund the company through your own methods, it is important to develop a strong understanding of the potential market. Knowing who the major players are in the area of interest helps to better position a business plan prior to submitting it for consideration. Additionally, searching for businesses that are similar and doing research on the differences can help to create a benefit.

Not Defining SMART Goals

Establishing SMART goals is key for any business plan. SMART, which stands for Specific, Measurable, Achievable, Relevant, and Time-Based, is important for any objectives set within the plan. By defining clearly specified goals, readers of the plan gain confidence that realistic objectives are being attempted, which increases their likelihood for investment.

Not Recognizing Competitive Advantages

Every business must have a competitive advantage, and this should forefront in the business plan. This can include a unique product or service, to a specific way of providing the product or service, or even advantages in the market itself. Without showing an advantage it poses a major disadvantage when applying for funding, as potential investors will be seeking proof of an advantage to move forward with the investment.

Unclear Writing

When creating a business plan, it is important to ensure that all ideas and concepts are expressed in clear and concise language. Many entrepreneurs make the mistake of failing to clearly define their business’s purpose, which can cause the entire plan to lack structure, purpose and direction. Furthermore, it is essential to keep the writing of the business plan to the point and avoid providing too much detail which can overwhelm and confuse the reader.

The visual presentation of business plans is also often overlooked, which can lead potential investors to dismiss the plan completely. Poor formatting, such as improper font sizes, colors and layouts makes the plan difficult to read and leads to an unprofessional impression of the business. Every aspect of the presentation should be carefully designed to draw attention to the most crucial information, making it easy to understand and highlighting the important aspects of the company in order to obtain the desired results.

4. Financial Forecasting Errors

When it comes to financial forecasting, it’s easy to make mistakes. Business owners should strive to accurately predict their future financial performance to ensure a successful venture. However, even the most experienced entrepreneurs can make costly financial forecasting errors.

a. Overestimating Sales

One of the most common financial forecasting errors is overestimating sales. It’s important to be realistic in your sales projections. Many business owners fail to account for competitors, market changes, or the cyclical nature of some industries. Consequently, they overestimate their sales and face cash flow problems when the reality of their business financial performance is lower than expected.

b. Not Accounting for Expenses

It’s also important to account for all of your expenses in your financial forecast. Common costs that business owners overlook are taxes, salaries, rent, and insurance. If these expenses are not taken into account it can lead to unforeseen costs in the future and prevent a business from having positive cash flow or hitting its financial targets.

c. Not Establishing Good Financial Practices

Finally, one of the most important steps you can take when creating a financial forecast is to establish good financial practises. This means embracing financial discipline, tracking your spending and costs, and understanding the financial impact of your decisions. With proper financial monitoring, you will be able to prevent financial forecasting errors and adjust your plans accordingly.

Lack of Customer Focus

When writing a business plan, it is essential to pay close attention to the customer base that the business is targeting. If a business fails to fully define their target market and properly assess the needs of their customers, their plan will fail to deliver results.

Not Defining their Target Market

Businesses often make the mistake of not properly defining their target market in the business plan. Without a clear understanding of their customers, their plan will lack focus. This can result in a weak marketing plan or a plan that doesn't effectively identify strategies to reach their target market. It is important to clearly describe the target market in the plan and avoid generic statements such as 'everyone'.

Failing to Properly Assess the Needs of the Customer

In order to properly appeal to their customers and make the plan profitable, businesses must take the time to assess the needs of their customers and use this knowledge to their advantage. By understanding their customers' needs, businesses can create a plan that clearly outlines how their products or services will address those needs. Without this knowledge, businesses may focus on features that are irrelevant to their customers or miss out on opportunities to differentiate their products from the competition.

It is important for businesses to prioritize their customers in the business plan. It should be clear to the reader how the business intends to meet the needs of the customer and make them more satisfied. With this knowledge, the plan will have a stronger chance of success.

Unprofessionalism

A business plan is a representation of the business, and thus it needs to be presented with utmost care. Make sure to avoid the following unprofessional errors when writing a business plan:

Misspelling, Typos or Grammar Errors

The smallest errors can be the most costly; spelling check and proofread every document multiple times, and if possible, have someone analyze it for you.

Unclear Logos and Graphics

Getting professional logos and graphics that appeals to the readers’ emotional senses can show the seriousness taken in making the business plan. Clarity and legibility of text should be maintained throughout the entire document.

Not Checking the Accuracy of Facts

Do not make assumptions. Double-check facts with reliable sources to guarantee accuracy. Back up any claims you make in the business plan with evidence.

Poor Organization

Organization matters when writing a business plan. Texts should be logically ordered so that readers are able to understand the sense and idea of the plan. Separate paragraphs should contain different topics. A color-coding system is beneficial to illustrate the logical flow of the plan.

Writing a business plan is an important part of any small business’s success. Although it may seem like a daunting task, following the advice in this article can help business owners make sure they create a comprehensive and effective plan. To conclude, there are some common mistakes that many people make when writing a business plan.

Summary of Key Points

Business owners should take their time writing a business plan and make sure to include the following key points:

• Business objectives
• Product or service description
• Target market
• Financial forecasts
• Tactical goals
• Management team

Emphasis of Importance of Writing a Thorough Business Plan

It is important to take the time to create a detailed and thorough business plan. Failure to include important information can result in a plan that is incomplete or hard to follow. A solid plan will give potential investors confidence in the business and help a business owner better understand their target market and goals. Avoiding common mistakes will ensure that a business plan is as effective as possible.

Reminder That Mistakes Should Be Identified and Corrected

Writing a business plan requires careful attention and thought. It is important to take the time to make sure that mistakes are corrected and that important points are not overlooked. It is also important to seek professional advice if it is needed. Taking the time to carefully craft a business plan can go a long way in helping entrepreneurs achieve their goals.

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10 Common Business Plan Mistakes

Are you thinking about getting your business plan underway? Many elements go into a good business plan. And it often takes time, patience, and many revisions before you get it right. Set yourself up for success by learning how to avoid these ten common business plan mistakes.

1. Unrealistic Financial Projections

Lenders and investors expect to see a realistic picture of where your business is now and where you hope it goes. One of the most common business plan mistakes is overestimating the value of your company. Ensure your plan is pragmatic and explain your projections. This way, lenders and investors are much more likely to accept your plan, knowing you’re thinking logically.

2. Not Defining a Target Audience

You must define your specific target market, present how you’ve made these assumptions, and outline how you’ll target them. No business will appeal to everyone, so think carefully about who your audience is. 

Need help defining your target market and learning about market research? We offer resources such as a Market Research Resources Guide , seminars on market research and one-on-one consultations with in-house experts. 

3. Too Much Hype

It’s essential to believe in your business idea. But, to truly showcase its potential, you should focus on providing backup for this belief. Instead of relying on superlatives like “hottest” and “greatest,” wow them with your well-researched business plan. Let your good ideas and preparation speak for themselves.

4. Poor Research

Don’t let your hard work go to waste. Remember to double-check and substantiate all your research. Using incorrect or out-of-date information would discredit your business idea and plan. If you need clarification, get a colleague, friend, or family member to help you review it.

5. No Focus on Your Competition

Even if your business is one-of-a-kind, there’s no such thing as no competition. It’s important to highlight your competition, but not so much that the investor worries the business won’t survive. Focus on your niche and what separates you from other companies. Highlight how you plan to compete in the marketplace and paint an accurate picture of what the industry is like now and where you see it going.

6. Hiding Your Weaknesses

Every business has weaknesses, but you could risk deterring the investor if you hide or highlight them too much. The best way to address them is to include a detailed strategy for solving them. Ensure you’re being realistic and tackle these weaknesses head-on.

7. Not Knowing Your Distribution Channels

Consider how you will provide your service or distribute your product and create a secure plan. Include all possible channels and explain why they’re correct for reaching your target market. Your ability to articulate your strategy for how your product or service will reach clients is vital.

8. Including Too Much Information

Most investors have a mental checklist of 10 to 12 points they’re looking for in a business plan. The purpose of your plan is not to show the depth of your knowledge but to focus on the key elements of your business. Strive for clear and concise writing. If you have more information you want to include, create an appendix.

9. Being Inconsistent

Take time to review each section of your business plan and ensure it’s consistent. Double-check your highlighted target markets, statistics, and strategies to show investors you’re well-prepared and knowledgeable.

10. One Writer, One Reader

Remember to ask several people to review your plan before submitting it. Since you’re familiar with the information, it’s easy to miss spelling and grammatical errors. Another set of eyes will help your plan look more professional and ensure it reads correctly.

Need Help with your Business Plan?

Get started on your business plan by downloading our Business Plan Template and Cashflow Forecasting Tool.

Small Business BC’s advisors will help review your business plan and provide you with feedback with our Business Plan Review Advisory Service .

How Small Business BC Can Help Your Business

SBBC is a non-profit resource centre for BC-based small businesses. Whatever your idea of success is, we’re here to provide holistic support and resources at every step of the journey. Check out our range of business webinars , on-demand E-Learning Education , our Talk to an Expert Advisories , or browse our business articles .

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5 Common Business Plan Mistakes and How to Avoid Them

Writing a business plan is an important part of the business startup process. There has been debate in recent years concerning whether or not creating a formal business plan is really helpful. In our opinion, it is never a bad idea to go through the process of presenting your business on paper. If nothing else, it will really help you focus and dial-in the strategy and trajectory of your business.

To get the best information possible, we interviewed a variety of small business owners/business plan experts. Here are the 5 common business plan pitfalls they identified and what they had to say about avoiding them.

1. The Plan Fails to Address Risk - Tom Glatt ( Glatt Consulting )

Tom Glatt is the Founder and Owner of Glatt Consulting, a consulting company that advises Credit Unions on growth, achievement, and financial health strategies. Tom explained that a big part of what they do is writing/tweaking business plans, something which he has also done extensively with his own business.

He identified two major pitfalls. Here is what he had to say say about failing to address risk in your business plan.

"Too many business plans assume perfect scenarios unfolding with little friction. Taking some time to identify risks that could have a big impact on business is time well spent. I'll add that even when a risk section is included, those risks are often very generic and are quickly explained away. Simplified Example: "no one will want our product - but our research suggests this is unlikely." Carrying this example forward - exploring risks requires identifying and understanding factors that could temper demand. In the plan itself, those factors should be outlined along with the company's likely response when/if such risks arise. Rather than explain away lack of demand as an unrealistic risk, as in the example, the business should identify what could cause lack of demand - and then outline how the business will respond to the cause itself. "

2. Problems with Pricing Fundamentals - Tom Glatt

Tom also identified Pricing Fundamentals as a major business pitfall. He explained,

"For very small businesses, business plan assumptions about pricing often lack critical overhead detail which leads to overstated income/understated expenses. Pricing assumptions and/or models should factor in all aspects of overhead plus the margin the business owner needs to reinvest in the company's growth. Often inconvenient costs are removed from pricing assumptions in business plans because they make things look less rosy and/or because they illustrate business challenges that the owner would rather ignore."

The "Busy Bee Syndrome" - Dee Power (Former Business Management Consultant turned Author)

Dee has co-authored a variety of books based off of her experience as a business consultant, including "The Pocket Small Business Owner's Guide to Business Plans." Here's the most common pitfall Dee identified:

"A common mistake is what I call the "Busy Bee Syndrome." The business owner flits from one section of the business plan to another without completing any of the sections. By the time they return to a previous section, they may not remember what they were thinking.The bee may buzz from flower to flower but always has the end result, returning to the hive to make honey, as the goal. When writing your business plan, finish one section before moving on to another. This gives you a feeling of accomplishment and motivates you to keep going."

4. The Plan is Too Long - Rick Faulk and Marco Giannini

Rick (Chairman and CEO of Intronis ) and Marco (Founder and CEO of Protein for Pets ), both small business owners I interviewed, said that the most common problem they see, is that business plans end up too long. The whole point of writing a business plan is to focus in on the most important and pertinent business information. If your plan gets over 20-30 pages, you are probably not focused enough. Instead, really make an effort to dial-in and deal with the most important information, such as your product, your competition, the market problem and your solution, etc. If a lending agency or possible investor wants more information, you can always have separate documents ready that are more detailed in each area. But, for the plan itself, keep your information concise, organized, and to-the-point.

5. Not Having a Professional Presentation - David Waring (Fit Small Business)

David Waring is my business partner at Fit Small Business.

David Waring is the Editor-in-Chief for FitSmallBusiness.com and has had significant experience building businesses from the ground up. He explained that If you ever hope to impress investors or apply for a business loan, a professional business plan presentation is extremely important. In most cases, putting together a professional presentation on a program like PowerPoint, is not too difficult. However, in many cases, using business plan software can save you a lot of time. Fit Small Business has put together a business plan software guide , that should point you in the right direction and have you building a professional business plan in no-time.

From Our Partner

More in small business.

Avoid these 5 common business plan mistakes

A good business plan requires significant research and effort. To make the best impression, be sure to take the extra time to fine-tune your plan, so your audience will find it easy to read and understand.

Ready to start your business? Plans start at $0 + filing fees.

by   Jane Haskins, Esq.

Jane has written hundreds of articles aimed at educating the public about the legal system, especially the legal aspe...

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Updated on: March 21, 2023 · 3min read

1. Poor grammar, spelling, and punctuation

2. too much information, 3. not enough information about risks and competition, 4. unclear or unfocused writing, 5. formatting issues.

You've worked hard to put together a business plan for your new venture. You've followed expert advice and included sections that address your business and industry, your strategy for reaching your goals, your products and competitors, your marketing plan, your management team, and the money you'll need.

And now you're ready to share your business plan with banks and potential investors.

Before you present your plan , watch out for these common mistakes that can destroy your chances for funding, even if you've got a great idea that should be destined for success.

Investors and bankers tend to notice misspellings, typos, and punctuation errors right away. These mistakes can signal that you are careless, do shoddy work, or pay attention to details. They create a bad first impression that can quickly land your plan in the rejection pile. Have someone skilled at proofreading look over your plan before you present it.

You wouldn't be an entrepreneur if you weren't eager to talk about your business idea, and yet it's easy to get carried away with irrelevant information or technical details. This is especially true if you're in a tech-related business.

Investors need specific information about your products and services, but they may lose interest if your business plan wanders off into your life story or reads more like a technical handbook.

A typical business plan runs from 15 to 25 pages and should include an executive summary that provides a quick overview of your plan as a whole. If your plan needs to be much longer, consider putting some details into an appendix or supplementing your full plan with a shorter version you can use for making presentations.

Simultaneously, hardly anyone likes to talk about the competition or the risks involved in a new venture. A surprising number of business plans claim there's no competition at all.

Resist the temptation to gloss over the downsides—assess your competition realistically and explain how your product or service is different and why people want it.

Also, include detailed financial projections and industry information that is grounded in facts. Provide a basis for any assumptions you make. Take the time to do the research and assemble a full picture of your business and the reasons it is poised for success.

When you're close to a project, it can be surprisingly difficult to describe it in a way that outsiders can understand. You may neglect to say what your product is or what it's used for without realizing it.

Or you may use acronyms and industry jargon without explaining what the terms mean. A related problem is rambling, or sections that bounce from one thought to another, making it difficult for readers to follow.

Investors see lots of business plans, and, if yours isn't easy to understand, they'll quickly move on to the next one. Show your business plan to someone who isn't involved in your project and who isn't in your industry. Ask them for an honest assessment—if they find it hard to follow, make revisions, so your plan is crystal clear.

It sounds like a picky point, but details like fonts, headings, and formatting make a difference. Your goal is for your readers to believe in your business and give you money.

Make things easier for them by using an easy-to-read font, large enough type, and tables of contents and headings to guide them through the document.

Make sure your fonts and formatting are consistent throughout your business plan. Inconsistency looks sloppy, and that reflects badly on you. If your computer skills are lacking, hire someone to clean up the document and make it look neat and orderly.

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5 Common Business Plan Mistakes That Torpedo Startups Your business plan isn't a romance novel, so don't depend on just your passion to get investors interested in reading it.

By Larry Alton • Jul 29, 2015

Opinions expressed by Entrepreneur contributors are their own.

Writing a business plan is one of the first major steps you'll take as an entrepreneur. It's the tangible divide that separates entrepreneurs who just have an interesting idea and entrepreneurs who have a real, promising structure in place. It's a key that opens doors to investors, partners and employees, and the blueprint that makes the first few years of your operations possible .

Accordingly, the strength of your business plan has a major influence on the outcome of your business, especially in the beginning. If your business plan is poorly written, or if it leaves out significant information, it could prevent you from getting the funding, assistance or attention you need. Despite this, too many prospective entrepreneurs take the business plan phase lightly and blow through it without much thought.

When writing your business plan, be sure to avoid these five all-too-common mistakes:

1. Ignoring a major section.

There are no firm rules on what constitutes a business plan, per say, but the mentors and investors who will be perusing your work will have certain expectations about its content. You need a business summary page, a model for growth that includes financials and you need to describe your target audience and explain why they need your product.

List your competitors and describe why you are better than they are. Mention your hiring plan and how you plan to grow. A business plan missing any of these critical components could instantly disqualify you from further conversation. Make sure you cover all your bases.

Related: Business Plans: A Step-by-Step Guide

2. Neglecting the research component.

Your idea is significant, but ideas are confined to the mind. What exists in reality, and what people want to see, are objective numbers that support that idea. You might have imagined the product perfectly, but if the data doesn't support your supposition no investor will support you.

Take the time to do your research. Look at your target demographics, how well your competitors have performed and projected growth rates in your industry and similar statistics. Hard facts can't be refuted, so the more of them you include in your business plan, the better. Not including any will make you appear amateurish, and could ruin your chances at making a solid first impression.

3. Being vague.

When you start developing your business idea, it may come to you in fuzzy terms. You might think of your new app as "some way" to help people cook breakfast, but that vague language isn't going to cut it for serious investors and potential partners.

To make a good impression and solidify your business plan, you'll need to be as detailed as possible. Explain exactly what the app is, exactly what it does, exactly how long it will take to develop and exactly how you plan to market it. This goes for every single section of your business plan. Plot out as many details as possible without deviating from your overall intentions.

Don't underestimate the power of thoroughness.

Related: Considering Crowdfunding? Why You Need a Strong Business Plan First.

4. Writing in a closed system.

You came up with your idea, you thought about it thoroughly, you did some Google searches to find data supporting your idea, and you spent weeks fleshing out the entire business plan in your basement. It's comprehensive, well-researched, and well-written, but there's one problem: you wrote in a closed system.

You didn't get any outside opinions or feedback before completing your work, and in all likelihood, you failed to address significant problems that didn't occur to you but would have to someone else. You prevent this by conducting market research or surveys about your product and talking to colleagues, family and friends.

5. Boring your reader.

The term "business plan" makes this document seem boring, and while it's tough to liven up your financial spreadsheets, make your plan more exciting wherever you can. Talk about the possibilities for future expansion. Show your passionate for the idea. Write colloquially and informally, when appropriate, to reach your audience directly.

If you try to present your business as a series of numbers, nobody will want to read your plan. If you make it thrilling, people will see the personality behind the idea.

Think of your business plan as the foundation for the building that will one day be your company. It demands your full attention, your full effort and your full commitment. Invest the proper time and care into your business plan and it will support you as you turn your idea from speculation to reality.

Related: 3 Ways Untested Business Plans Are Worse Than a Waste of Time

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15 Common Mistakes When Starting a Business

Posted: April 13, 2024 | Last updated: April 13, 2024

1. Lack of a Solid Business Plan

Starting a business without a comprehensive plan is like embarking on a journey without a map. A well-thought-out business plan should include market research, a clear business model, financial projections, and a growth strategy. Avoid this mistake by taking the time to develop a detailed business plan before launching.

2. Ignoring Market Research

Underestimating the importance of market research is a common oversight. Understanding your target market, customer needs, and competitive landscape is crucial. Avoid this mistake by conducting thorough market research and continuously gathering customer feedback to guide your business decisions.

3. Insufficient Capital

Running out of money is one of the main reasons startups fail. Underestimating the amount of capital required for startup and operational costs can lead to early financial difficulties. Avoid this by carefully planning your finances, considering all potential expenses, and securing adequate funding.

4. Overlooking the Importance of a Good Team

A business is only as strong as its team. Hiring the wrong people or neglecting to build a skilled and motivated team can hamper your business’s growth. Avoid this by investing in hiring the right people and fostering a positive, productive work culture.

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5. Failing to Adapt

Rigidity in business can be detrimental. The inability to adapt to market changes, customer feedback, or technological advancements can leave a startup behind. Stay flexible and open to change to avoid this mistake.

6. Poor Marketing Strategies

Even the best products or services need effective marketing. Neglecting marketing or using ineffective strategies can lead to poor sales and low brand visibility. Avoid this by developing a strong marketing plan and regularly evaluating its effectiveness.

7. Neglecting Online Presence

In today’s digital world, a strong online presence is essential. Not having a website or social media presence can limit your reach and engagement with customers. Avoid this by establishing and maintaining a robust online presence.

8. Underpricing or Overpricing Products/Services

Incorrect pricing can either leave money on the table or drive away potential customers. Avoid this mistake by thoroughly researching your market to determine competitive and fair pricing for your offerings.

9. Overlooking Legal and Tax Obligations

Failing to comply with legal and tax requirements can lead to serious consequences. Neglecting to understand and adhere to these can be a costly mistake. Avoid it by seeking advice from legal and tax professionals.

10. Ignoring Customer Service

Poor customer service can damage your business’s reputation and lead to loss of customers. Ensure you have a strategy in place for effective customer service to avoid this pitfall.

11. Failing to Establish Clear Goals and Metrics

Without clear goals and metrics, it’s challenging to measure success and make informed decisions. Avoid this mistake by setting specific, measurable, achievable, relevant, and time-bound (SMART) goals and regularly reviewing them.

12. Not Protecting Intellectual Property

Failing to protect your intellectual property can result in competitors copying your ideas or products. Avoid this by understanding the types of intellectual property protection available and taking steps to secure your assets.

13. Scaling Too Quickly

Rapid expansion can be as harmful as no growth. Scaling too quickly can strain resources and lead to management issues. Grow your business sustainably to avoid this mistake.

14. Neglecting Personal Development

As a business owner, neglecting your personal development can limit your ability to lead and grow your business effectively. Invest in continuous learning and self-improvement.

15. Not Planning for Contingencies

Unexpected challenges are a part of business. Not having a contingency plan for potential problems can leave your business vulnerable. Develop a contingency plan to prepare for unforeseen events.

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