Avoid Five Fatal Business Planning Mistakes

Many factors comprise an outstanding business plan. However, to create a superb document, it takes time and many revisions. Unfortunately, inexperienced entrepreneurs often send business plans to potential investors before they are ready to be shared. Below are a few of the key mistakes commonly found in business plans for startup companies.

1. Unrealistic financial projections. Investors expect to see a business plan that paints a realistic financial picture of the anticipated growth of the company. If the plan is overly aggressive and not consistent with growth in the industry, the plan may be shelved. It is best to be realistic with your financial projections. You need to be prepared to defend and explain all important assumptions concerning your projections.

2. Not having a defined target audience. No business will appeal to "everyone." You must clearly define your market and you must present a clear picture of your potential customers — why will they purchase your product or service?

3. Over-hype. Too much hype and the overuse of superlatives can be the downfall of an otherwise sound business plan. Wow them with the business idea, not hype or buzz words.

4. Poor research. In an effort to get a business plan together hastily, many business owners do not double-check and substantiate their claims. Make sure your research is accurate, up-to-date, and verifiable.

5. No focus on your competition. Some business plans state that there will be "no competition," while others indicate only what the competition has done wrong. Investors reading a business plan expect to see such competition and how you plan to compete in the market. You cannot ignore competition or paint an inaccurate picture. If your idea is a good one and you truly do not have competition today, you will tomorrow. Guaranteed.

Other common errors include dry writing, inconsistencies from section to section, and making the plan too lengthy. It is important to take time to carefully review each section of your business plan. When you finish, ask several other sets of eyes to scrutizine it before sharing it with investors.