12 Common Business Plan Mistakes to Avoid

Loan officers and investors read a lot of business plans, and they see the same problems again and again. Here are the most common, and how to fix them before you hit send.

1. Hockey-stick projections with no explanation

Revenue that doubles every year with no supporting assumptions is the fastest way to lose a reader's trust. Show how you calculated sales: customers, conversion, price and frequency. The sales forecast template makes the assumptions visible.

2. No cash flow forecast

Profit is not cash. A 12-month cash flow forecast shows whether you can pay the bills while sales ramp up.

3. "We have no competition"

Every business has competitors or alternatives. Saying you have none suggests you have not looked. Use a competitive analysis.

4. A vague target market

"Everyone" is not a market. Describe a specific customer and estimate how many exist where you operate.

5. Underestimating startup costs

Permits, deposits, insurance and the months before break-even add up. Use a startup costs calculator and add a reserve.

6. No clear funding request

State exactly how much you need, what it pays for and how it will be repaid.

7. Too long, too much jargon

Clear, short sentences win. Cut anything that does not help the reader decide.

8. A weak executive summary

Many readers stop after the first page. Make it specific and complete. See the executive summary template.

9. Ignoring risks

Readers know there are risks. Naming them and explaining your plan builds credibility.

10. No break-even point

Know how much you must sell to cover costs. Use the break-even analysis template.

11. Pricing below cost

New owners often price to beat competitors without counting all of their costs. Check yours with the pricing calculator.

12. Writing it once and forgetting it

A plan is most useful when you compare it with actual results every month and update it every year.

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