Things have gone terribly wrong.
The banker rejected your loan application again. You’re stuck. And your spouse is losing faith.
You feel that nobody believes in your project.
And you can’t help wondering…
Do you just need to be patient, jumping from bank to bank, waiting that someone finally approves your application?
Or it could be that, really, your business plan sucks?
The truth is…there’s no way to know for sure, but if you pay attention to the warning signs, you can figure it out.
I’ve collected 15 of the most common here. Read them closely and see if any describe you:
1. You used a template
It’s hard to say this but…someone needs to tell you.
If you’re relying on templates, you’ll never get the results that you want.
Why? Because every business is different and, one size never fits all.
Jessica Oman puts it well:
“Business plan templates can be helpful for organizing your thoughts, but on their own, they won’t teach you to think like a business owner, to make the critical decisions that drive the success of your company, or get funding.”
By no means, I’m saying business plan templates are bad. If you want to use them, fine, but don’t hope the template does the thinking for you.
2. Marketing isn’t important to you
Many entrepreneurs make this mistake.
They can be excellent business people and experts in their industry. But they forget about marketing – they think it’s not that important.
However, if you aren’t giving marketing the attention it deserves, your business plan will lack strength.
Just think in the words of the expert Marsha Friedman:
“No matter how ingenious your product or service, no one will find it if they don’t know it’s there.”
Do your homework. Analyze your market. Discover how to position your business in the mind of your audience. Then, include your findings in your plan.
3. It’s too complicated
It’s a business plan, not a doctoral thesis.
Simplicity is one of your most powerful tools. Use it wisely. Nobody will complain about that your business plan is too easy to understand.
Tim Berry, the chairman of Eugene, Ore, says:
“Effective business writing is easy to read. People will skim your plan — they’ll try to read it while talking on the phone or going through their e-mail. Save the deep prose for the great American novel you’ll write later.”
Keep it simple. The banker will thank you.
4. You’re using jargon, buzzwords and acronyms
Again, there’s no need to use this kind of verbiage in your business plan.
Clever phrases, jargon, buzzwords, and acronyms won’t impress bankers, but all the opposite.
Yes, you may know what KISS (Keep It Simple, Stupid) stands for, but it doesn’t mean everybody does.
The simpler your business plan is, the more people will understand it, and, therefore, it will give you better results.
5. It’s too long
This is a controversial topic.
Many people argue that your business plan should be long. However, I don’t agree with that.
Think about it:
Bankers and investors are busy people. They don’t have time to read 80 pages of content. If you think they’ll pay attention to your message regardless of its length, you’re wrong.
What’s the right size, then? You may ask.
Simple: As long as it needs to be, and no more.
What I mean, is that you should only include necessary information. Don’t add content just for the sake of adding content.
Longer business plans aren’t necessarily more impressive.
6. You aren’t supporting your reports with visual content
Many studies have found that our brains are wired to process visual information 60,000 times faster than plain text. So, if you can include imagery in your business plan, do it.
Things like charts, diagrams, and images will help the reader understand your data with more ease.
7. You’re using the wrong fonts
This one is really simple but it’s surprising how many people ignore it.
For instance, did you know that only a few of the most readable fonts are fine at 10 points?
Most of them are better at an 11 or 12 point size.
If you use the wrong fonts in your document, many people will have a hard time trying to read it.
Jacob Funnell has published one of the most amazing guides on the topic. He shows you how to choose the right font for your business document.
8. You have never updated it
You’ll agree with me when I say:
“Businesses change over the time.”
What works today may not work tomorrow.
That’s why it’s crucial that you update your business plan consistently.
Casey Naiduk explains it this way:
“As soon as a business plan is created, it is slightly wrong and outdated.
If not, it is incomplete or too safe. How can this be? Consider this: Markets and technology are never stagnant. They are ever-changing. As you are standing in line purchasing the latest gadget, a newer replacement model is in the works.
This is what drives economies and innovation. It is this pressure that creates new industries and different, simpler ways of achieving the same thing.”
Of course, this doesn’t mean you should update your plan every day, but try to do it at least once a year.
9. You think that “sales growth will take care of everything”
Many optimistic entrepreneurs think they’ll be able to fund their businesses with their own sales growth.
That’s their “great plan.”
However, that doesn’t happen very often.
Think about it:
You usually have to pay suppliers upfront before even your customers pay you. If you don’t have enough cash flow to manage this kind of events, growth will be something hard to achieve.
That’s the reason why fast-growing companies rely on bank financing.
Have that in mind when writing your business plan. Sales growth alone won’t be something viable for the banker.
10. You didn’t start at the end
In “Start at the end,” Dave Lavinsky says:
“When you know where you want your business to end up, you can reverse engineer your business plan to get you there. With a detailed vision of the end, you and your team will stay focused and energized, always moving toward that ultimate goal.”
I couldn’t agree more with that statement.
When I was in school, I used to apply a similar technique. I used to start at the end of new math problems I was unfamiliar with. It worked really well.
When you start at the end, you see things from a different perspective – you’re able to see the “big picture.”
With that “big picture” in mind, you’re able to set clear goals and objectives that, ultimately, move you towards your desired result.
11. You think your business plan is “good enough”
If you could rate your plan on a scale of 1 to 10, what would you give it?
If you said “6,” 7,” 8,” or even “9,” you’re doing things the wrong way.
You CAN’T rate your business plan. You’re either blowing the bankers’ mind or putting them to sleep.
A business plan graded as an 8 or 9 needs to be modified.
12. You don’t know who your competitors are
If you don’t know who your competitors are, how can you say your business is different?
As point 14 states, when writing your plan, you need to be prepared to say exactly who they are and what makes your business better. This will add much more strength and credibility to it.
13. You don’t back up every claim you made
Credibility is one of the most important aspects of a successful plan.
That’s why it’s essential that you back up every claim you make.
If you say you’ll become a leader in your industry next year, you need to say why you think so and exactly how you’ll achieve that.
If you say you’ll double your sales within 6 months, you need to support that statement with facts.
Remember, banks, lenders, and investors want to see facts, not assumptions.
14. You don’t have a ‘Unique Value Proposition’ in place
In words of Peep Laja —marketing expert— a unique value proposition is:
“Your UVP is a clear statement that describes the benefit of your offer, how you solve your customer’s needs and what distinguishes you from the competition.”
Without a UVP in place, your business plan lacks potential, credibility, strength, and positioning.
Discover what differentiates you from your competition, and state it in a clear, concise fashion so everyone can immediately understand what your business is all about.
This statement won’t only help you create a more attractive business plan, but will also position you in the marketplace.
15. You don’t have an ‘Executive Summary’
If you haven’t created an executive summary, you’re leaving a huge opportunity on the table.
Here’s where you’ll highlight the most important points of your plan and it’s the first thing the banker will see.
I’d say here’s where you win or lose the battle. And I’m not the only one who thinks this way. Pablo Bonjour, founder and CEO of Katy, Texas-based SMG Business Plans, says:
“The most important reason to include an executive summary is that in many cases, it is the only thing the reader will read.”
In simpler words, the executive summary is vital. Make sure to include it in your document.
The bottom line
No, creating a winning business plan is not easy.
You can’t just download a template, fill in the blanks, and hope the bankers like your project.
If you want results, you need to work your but off. That’s the hard truth.
But hey, your project is worth it, isn’t it?
If you’re willing to work, you’ll have much better results in everything you do.
So, what are you waiting for?
Get started now.