Whatever you do, avoid making these hilarious (but deadly) business plan blunders.
Writing a business plan can be a tedious process for someone who wants to start a business. Afte rall, who wants to spend all that time thinking about whether the market supports their idea and how much they think they'll spend on office supplies the first year?
But not spending the time to draft a smart, thoughtful and professional plan could spell the end of your venture before it even gets off the ground. Whatever you do, avoid making these hilarious (but deadly) blunders. 1. The Longest Plan Ever Written Writing your business plan isn't the time to channel your inner Charles Dickens. You're not getting paid by the word here. In fact, if you make your plan too long and complicated, you probably won't get paid at all. Potential investors will likely be skimming your plan while also chatting on the phone or thinking about this weekend's golf tournament, so make sure to use short sentences, straightforward language, and bullet points with quick explanations. Avoid jargon or confusing acronyms.
2. The Handwritten PlanA Freedom of Information request made by two school trustees in New Westminster, British Columbia, Canada, uncovered an unusual document: a one paragraph, hand-written business plan for the district's business company -- something that doesn't really inspire trust in your kid's education. Sure, you might have jotted out your great idea on a napkin while out at happy hour, but that chicken scratch splashed with light beer isn't what you want to present to investors.
3. The Plan that Spell Check Forgot You know how you hesitate to enter your credit card information on websites that look like they were designed by a 5-year-old? Turns out, investors aren't too keen on writing checks to entrepreneurs who present them with documents titled "Bizness Plan." One high-profile investor refused to even read the plan for one investment he normally would've been interested in because of spelling and grammatical errors in the first paragraph. Such mistakes make both you and your business look sloppy and less appetizing to investors. Have a friend or colleague edit your plan before approaching investors.
4. The Plan My 8-year-old Daughter Designed Repeat after us, "My business plan is no place for Comics Sans." Keep your design simple and professional, stick to one or two fonts, and don't use font sizes under 10 points. Skip cutesy stock images of unicorns, and nix experimenting with too many colors. It goes without saying that your plan does not need glitter glue (unless, of course, you've invented new and improved glitter glue). Save that for your kid's next school project. Make liberal use of white space and page breaks to avoid cramming too much information on one page. Let your plan breathe.
5. Blind Optimism Investors will be wary when an entrepreneur pitching a website dubbed "Match.com for dogs" projects $1 billion in profits within the first year. One business plan reviewed by a private equity firm projected sales 110 percent over even the most optimistic market forecasts, according to an article on Talk Business magazine. Chances are if you think the value of your company is more than Facebook's, you're probably being a little too optimistic. Experienced investors will look at your financials first; if you didn't do your math homework, you and your business will not only lose funding, but credibility, too. While you want to be aggressive about your projections, you also don't want to be disingenuous -- compare growth rates, current positions and financial structure for comparable businesses in your market with your own plan to create a more realistic picture.
6. High-end Taste on a Shoestring Budget Sure you might picture yourself sipping scotch ala Don Draper and rubbing elbows with CEOs and CFOs at the local country club, but that's not the sort of stuff you want to budget for in your business plan. When writing out your shopping list, you'll have to include estimates on less glamorous items like office space leasing, salaries, and copy paper. Rather then focusing on high-rent locations, top-of-the line equipment and a company car complete with its own driver, make sure you're demonstrating to investors that you're a savvy negotiator and that you look for the most cost-effective solutions for your financial needs to promise the highest returns. Investors want to invest money in small business so that they can make money -- not to dress you in designer suits or make sure you're using the latest smartphone, so don't include $5,000 for wardrobe or $1,000 for phone.
7. The Deja Vu Plan There's plenty of business plan software out there that can provide a model for your plan as well as sample business plans you can reference. But don't be the guy that steals someone else's plan and just sticks the name of his company and logo on top of it. Why? Well, for one it's forgery. It's also the lazy man's way out of business planning. Lastly, by not going through the process of writing your own plan, you're foregoing all the research and financial planning which helps you make a confident pitch to investors.
8. The Plan With the Worst Pick Up Line Ever Remember the time that creepy guy walked up to you and asked you if your legs were tired ... and then told you they should be because you'd been running through his mind all day? Don't be that guy when writing your business plan. While you want an opening that grabs your lenders' attention, you don't want them to throw up in their own mouths. The Occasional CEO recounts some of the worst opening lines to business plans he's come across:
- "You'll love our team, and I can't wait to write all about them -- especially me."
- "You'll love our cool technology; in fact, we're going to spend 90% of the plan (including lots of pictures and exciting flowcharts) describing it."