1. Unrealistic Financial Projections
Most people are familiar with the businesses on the Dragons’ Den who overestimate the value of their business are shot down by the dragons. Lenders and investors expect to be shown a realistic picture of where your business is now and where it hopes to be, therefore if the plan is overly optimistic with no explanation of the projections, it will ring warning bells and cause the plan to be rejected.
2. “We have no competition”
No matter what you may think, you have competitors. Maybe not a direct competitor – in the sense of a company offering an identical solution – but at least a substitute. To say that you have no competition is one of the fastest ways you can get your plan tossed – investors will conclude that you do not have a full understanding of your market. The “Competition” section of your business plan is your opportunity to showcase your relative strengths against direct competitors, indirect competitors, and substitutes.
Besides, having competitors is a good thing. It shows investors that a real market exists.
3. Procrastinate to write till too late
Too many businesses make business plans only when they have no choice in the matter. Unless the bank or the investors want a plan, there is no plan. Don’t wait to write your plan until you think you’ll have enough time. “I can’t plan. I’m too busy getting things done,” business people say. The busier you are, the more you need to plan.
4. Bad Research
All research must be double checked and substantiated. By using incorrect or out of date information you will discredit your business idea and the remainder of the plan.
5. Hiding Your Weaknesses
Do not hide your weaknesses but do not highlight them too much. Every business has its weaknesses but by hiding them or highlighting them too much you will put off the investor. The only way to address these weakn-esses is to include a detailed strategy of how you plan address these problems.
6. Being Boring
If a potential lender gets two pages into your plan and is bored, that’s a terrible sign. It is important to have the reader interested right from the beginning i.e executive summary on the very first page. And don’t neglect your cover page: a well-designed logo never hurts.