Most of you will have a business plan for your startup, as this document acts as the blueprint and roadmap for your company. Whether it is to share with management to help with strategy or present to investors for funding, the business plan will provide the basis for future decisions.
However, despite its importance, your business plan probably sucks. It fails to achieve its objective and ends up misrepresenting your business to the detriment of decision makers.
Here are the five biggest reasons your business plan is failing and how to overcome these roadblocks.
1. You don’t write with your audience in mind.
Using one business plan for everyone will makes your plan irrelevant, as it will never satisfy any audience group. The business plan needs to be written for a specific audience. Only then can it address their concerns and questions.
Action point: Be clear from the outset who you are writing the business plan for. Next, outline what the key questions are they will want answered and structure the plan with those questions in mind.
Related: Business Plans: A Step-by-Step Guide
2. You spend too much time discussing the nitty-gritty of your business.
No one knows your business better than you. As such you will at times end up prevaricating to show off your knowledge more than adding value for the reader.
This is a good way of putting off any reader and will detract from your most relevant points.
Action point: Write just enough to answer the key questions from point one. You can determine which section you need to include in the plan by acknowledging who you are writing for. If the plan is for your team, for example, you may not need to go into lots of detail around the product section, as they will have familiarity with this.
Always re-read and edit your plan to delete excess words and sections that are adding nothing for the reader. It is also a good idea to get others to read the plan before finalizing it.
3. You can’t articulate your market.
Too many entrepreneur’s do a “copy and paste” exercise on the market section by using vaguely relevant material they get off the Internet. In my time as an investor, this was often the most disappointing section.
A well thought through market section however, stands out. Attention to detail and being succinct is required.
Action point: Break down your market to identify exactly what and who is relevant. For example, in the tech and software space, citing the whole software market is useless if your company operates in the big data space. Think of where your end customer sits and explain the characteristics of that specific market.
4. You don’t explain your financials.
Many entrepreneurs are the most uncertain about the financials section in their business plan — perhaps because of the perceived complexity and unfamiliarity. But it doesn’t need to be that difficult. Like the other parts of your business plan, tell a story.
Related: 5 Ways to Hack a Business Plan
Action point: Clearly explain assumptions in your financials. For example, if you have assumed 10 percent revenue growth and a 60 percent gross profit margin, what is this based on? When you talk through the financials section make sure to explain what the numbers are telling you in simple language. This approach is more useful than mechanically stating numbers. The relevance of what the data shows allows for tangible dialogue with your audience.
5. You don’t explain what’s next.
A lot of business plans rattle through sections in the business plan like a tick-box exercise with the purpose of completing it. They don’t explain what’s next. Just as it is important to set the context at the outset by identifying your audience, it is important to conclude on where you expect to go with the business in the short and medium term. Any business plan would be lost without this.
Action point: Spend time distilling key points from the plan you have developed to present what you want your audience to do with the plan. If your audience is your team, you want to present a view on strategy that you can discuss with them. For an investor, articulate your funding requirements, milestones and have a high-level deal structure for them to work with.
Ultimately a business plan will never be final, as it will continue to change as the business grows and you respond to threats and opportunities in your market. However, adhering to the evergreen points above will ensure your plan is built on strong foundations, so that your decision-making is well thought through.