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Common Business Plan Mistakes and How to Prevent Them

Updated: Jan 24

With the winter season coming, I’m reminded of my first skating lessons as a child, where I quickly learned that it’s impossible to be perfect at something the first time you try it. Creating a plan for your small business is no exception and no one is an expert right away, although getting some advice can help start you off on steadier feet. Keep reading to be one step ahead and learn the common mistakes made when creating a business plan and how to avoid them.

1) Unrealistic financial projections

It’s important to show investors an accurate picture of where your business is financially and where you hope to be in the future. If a plan is overly optimistic without much to support it, investors are more likely to reject your plan. Make sure the information that you present is accurate and realistic.

2) Not defining a target audience

You must clearly define your target market and why you have chosen it. As we mentioned in our blog post last week, it’s important to include the demographics, psychographics and geographics of your ideal customer. You will also want to include how you plan to target this market to reach your customers effectively.

3) Bad research

Nothing kills an idea faster than sloppy research. Using incorrect or outdated information can discredit your business idea. To avoid this, make sure all research is double-checked. You want to put your best foot forward and impress investors with your extensive knowledge of your market.

4) Including too much information

Much like hiring managers with resumes, investors read many, many business plans. You’ll want to make your plan concise and well-organized. A good small business plan should be 5-10 pages long. A good way to cut down on content is to include visuals. For example, a line graph could show your business’ financial projects more effectively than a paragraph.

5) Not focusing on your competition

There is rarely a business idea that has not already been thought of. No matter what industry you enter, there is likely to be competition. Instead of hiding this, show investors that you are aware of these competing companies and how your business differs from them.

By outlining your niche, you can prove that your idea will stand out in the marketplace.

With all that said, everyone makes mistakes, and it can be easy to overlook an error when developing your business plan. Hiring some extra help to create and review your plan can save you lots of time and stress. At STEPS, we offer many business planning services that can ensure that you create the strong plan that your business idea deserves. Learn more on our business planning tab or reach out to us through our contact page!

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