When planning a trip, you first select the items you’d need to take along, choose your mode of transportation; whether by air or road, book the trip through a transport company of your choice, and ensure that they’re taking you to the right destination every step of the way.
This model is just like starting a business. You have to plan your steps, choose whether to accelerate your business growth or not, select the right team that could make that happen, and regularly check-in to make sure your business is enroute the right direction.
While most people prefer to use a business model canvas largely because it is simpler, faster, and more direct, drawing up a business plan is far more important and efficient, because of its vast demand by banks, investors, government organisations, and other financial institutions.
If you’re thinking of writing a business plan and don’t know what to leave out or retain, here are the critical do’s and don’ts of writing an amazing business plan.
The Dos Of A Great Business Plan
1). Follow A Structure:
When writing a business plan, you don’t have to go too extreme by using fancy decorations, attractive formatting, or preparing a verbose document. Instead, follow a streamlined structure for your plan.
Write a good executive summary, detail the products and services, prepare the SWOT analysis to show the strengths, weaknesses, opportunities for growth, and threats that may prevent the company from hitting its projections, and complete every important section of the business plan with strictly quality information.
2). Do A Proper Market Research:
A good market research helps you know how viable a business is, what to expect, where the industry trends are headed, and ultimately if the business is worth pursuing at all. If the market research proves the business model to be viable, you can go on to prepare the marketing plan, talk about the business’ products and services, and determine how much money would be needed to execute the business idea.
3). Make Authentic Claims:
When writing a business plan, your timelines and projections must be very realistic. It’s important that you’re very pragmatic, think logically, and be highly actionable. Your business plan must make room for unexpected delays and be highly conservative in the financials.
4). Identify Your Competition:
It’s important that you properly identify your existing and potential competition in the business plan, so you can clearly state what differentiates your business from the rest of them.
5). Show How A Return On Investment (ROI) Would Be Achieved:
The financial plan must show exactly how cash would flow in and out of the business. It must also show how long it would take the business to break even, so that investors and creditors can know when to expect a substantial return on their investments (ROI).
6). Share Your Business Plan:
After preparing your business plan, it’s a good idea to share it with people you trust to go through it and tell you if it’s a valuable piece. Let them make their suggestions on how you can improve the plan and what they believe would compel any investor or financial institution to take it serious.
The Don’ts Of A Great Business Plan
1). Unnecessary Excess Text:
Bloating your business plan with excess text because you want it to appear comprehensive is not just highly unprofessional, but would bore whosoever is reading it. It makes you appear like you don’t know what you’re doing and so hinders your chances of convincing the person it’s submitted to.
Instead of piling up your business plan with unwanted text, focus majorly on the quality of the content. Investors and banks generally want to see you hit the nail on the head, as it makes their jobs a lot easier.
2). Making False Statements:
Avoid making up statements in your business plan. Everything written or implied must be well documented to prove there are true facts backing it. You may also need to include data from reputable sources or testimonials from people you have helped out.
3). Preparing A Poorly Written Execution:
The execution must be well documented and explained in the business plan. No matter how wonderful an idea is, without the right team and execution powering it, the idea is as good as dead in the waters.
You need to convince investors through the detailed execution that you’re not just going to pull this off, but will be worth their entire time and money.
4). Excessive Focus On The Product:
Focusing too much on the product in your business plan is the wrong way to go about it. The plan should lay an emphasis on not just the products or services proposed, but on the entire business model. The reason is most products change the minute they launch because, the founders realize that people prefer to use it in a different way than what they initially built it for.
The user experience is everything, and knowing that user’s ultimately determine the eventual future of the product or service should help you lay more emphasis on your overall business plan than on the product itself, when pitching to investors.
5). Overestimating The Projected Income:
Overestimating your projected income and falling short on your deliverables after securing a loan or an investment can tie a bad reputation to your name.
Since most investors know you’d naturally try to convince them by bloating your figures, it’s important you resist the temptation and state the financial facts. This doesn’t just make you appear professional, but it makes you more trustworthy when they verify the facts.