Business plan mistakes

Don't make these errors in business plan preparation and presentation will undermine

the credibility of the plan and hurt your chances to receive funding:

• Submitting a “rough copy,” (with coffee stains and typos) tells the reader that

management doesn’t take the planning process seriously.

• Outdated historical financial information or unrealistic industry comparisons

will leave doubts about the entrepreneur’s planning abilities.

• Unsubstantiated assumptions can hurt a business plan; the business owner

must be prepared to explain the “why” of every point in the plan.

• Too much “blue sky” - a failure to consider prospective pitfalls - will lead the

reader to conclude that the idea is not realistic.

• A lack of understanding of financial information. Even if someone else

prepares the projections, the owner must be able to explain them.

• Lack of specific, detailed strategies. A plan that includes only general

statements of strategy (“We will provide world-class service and the lowest

possible price.”) without important details will be dismissed as fluff.

Especially important if the business plan is prepared for a lender:

• No indication that the owner has anything at stake. The lender expects the

entrepreneur to have some equity capital invested in the business.

• Unwillingness to personally guarantee any loans. If the business owner isn’t

willing to stand behind his or her company, then why should the bank?

• Starting the plan with unrealistic loan amounts or terms. Do your

homework and propose a realistic structure.

• Too much focus on collateral. Even for a cash-secured loan, the banker is

looking toward projected profits for repayment of the loan. Cash flow should

be emphasized as the source of repayment.