16 Mistakes Startups Make In Their Business Plans

16 Mistakes Startups Make In Their Business Plans



A business plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals. Business plans may be internally or externally focused. Depending on the target or goal of writing a business plan, it is always important to convey the ideas that will make the business succeed or attract the necessary funding needed if you are targeting an investor. These mistakes are common and can be avoided.

  1. A common mistake is underestimation of the financing required.
  2. Not planning for management succession.
  3. No clear answer to “What problem are you solving?”
  4. Using template/business plan software to write your business plan without the neccessry changes to reflect your exact need.
  5. Minimal or No risk analysis
  6. Overly optimistic financial numbers.
  7. Writing the plan for yourself and not for the business.
  8. Minimal market and competitive analysis to identify what you are up against
  9. Not enough detail on how the capital will be used.
  10. Too aggressive at estimating market share and growth and no mention of how to defend and sustain revenue streams
  11. No executive summary
  12. Overestimating revenue growth
  13. No clear specific, realistic and attainable goals and objectives.
  14. Not providing due emphasis to SWOT analysis
  15. Misunderstanding of the market place and the value proposition for the product
  16. Overestimating the value and desirability of your product or service

3 Comments

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  1. Parrish Ketchmark

    Teresa, thanks for sharing. At RTP Capital, we echo this sentiment! Raising money is HARD! Related to your post, I'd also like to stress a couple of items a little further:

    1. Competitive Position: Realistically compare and contrast the features AND benefits that buyers (customers) consider important (to both your solution and the solution of your competitors). If YOU don't measure up, modify, adjust, and overcome.

    2. Validate Market Need, including both the problem (i.e. pain) and your specific solution. While doing so, ask hard questions and seek degrees of commitment (support vs. lip service). Talk is cheap, and people love to tell you what you want to hear, except when it comes time to ACT (pay money or take a desired action).

    3. Build sales funnel, starting with market need validation calls and expanding from there. Use a sales management tool….Many free solutions exist, such as Zoho CRM. This empowers you to control the prospect (move them to the next level) vs. the prospect controlling you (i.e. spreadsheet). Leave this sales funnel with investors, because when you come back for another meeting, hopefully you'll show progress through a funnel, which may indicate progress and execution, even though you haven't signed up a zillion customers.

    Only my 2 cent opinion, but if entrepreneurs did just these three things, odds of being taken seriously by an investor will improve dramatically.

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