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Much like a map, a business plan can help steer your business in the right direction.

 

A well-written business plan outlines the business idea, goals, strategies to achieve said goals, risks and financial projections. Plus, these facts must be backed by research, such as market analysis, competitor analysis, management plan, operating plan and more.

 

Before we get into common mistakes to avoid, here are the main reasons why entrepreneurs need business plans. 

 

  • Help with Realistic Planning: The market research to identify the challenges and market conditions can help you set realistic targets and roadmaps and establish your business goals.

  • Secure Funding: An essential part of any business, a business plan helps you attract potential investors and secure external funding. No matter if you are seeking funding from a bank or venture capitalist, a business plan demonstrates whether or not your business is worth the investment. 

  • Provide Business Direction: While you may have a general idea of what you want to achieve, putting it in writing allows you to have clearly defined objectives. In doing so, you can also review your business direction, monitor its performance and keep your team on track.

  • Identify Strengths and Weaknesses: A critical component of preparing a business proposal is looking at your plan objectively. When you consider your strengths and weaknesses, you can address the risks and be prepared for situations beyond your control.

 

Common Business Plan Mistakes: What Not to Do

 

So what should you double (or triple!) check when preparing or writing your busines plan? Here are some common mistakes that business owners make – so be sure to avoid them: 

Lacking Thorough Financial Projections

Steer clear from presenting unrealistic or incomplete financial information. Potential investors and clients often times expect to see a realistic picture of your current business and its growth potential.

 

Additionally, an overly optimistic plan without sufficient evidence will ring warning bells from investors and might cost you the funding that you're trying to secure.  

Failing To Establish A Sound Business Model

The basis of a successful business is its ability to make a profit. Aside from selling a product or service, a sound business model should generate more revenue than your costs.

 

Aside from that, failing to establish the proper channels to reach your target market and deliver value to your customers may indicate a lack of forethought to investors. Having proper plans to reach and grow your customer base is vital.

Inconsistent Information

It goes without saying that proofreading and checking your proposal is of utmost importance. Besides grammar and spelling, ensure that you mention accurate numbers, target markets, goals and roadmaps.

 

Especially if your proposal was prepared collaboratively, take time to review each section to ensure consistency.

No Defined Purpose For Your Business Plan

You should have a clear goal in mind when writing a business plan, whether it is to secure funding, persuade prospective clients or attract investors. With a goal

in mind, you can stay focused on the key points of your proposal and trim unnecessary information.

 

If you lack a strong purpose, chances are, it will negatively impact business operations too. Your business plan should showcase an idea that has profit potential. 

How to Avoid the Business Plan Mistakes

While writing a business plan may seem daunting, avoiding these common mistakes would give your plan a higher chance of success.

 

Alternatively, you can hire an external business advisor to review your plan objectively and identify any blind spots.

 

No matter what stage your business is in, we can help accelerate your growth with exclusive offers and deals on various business solutions.

 

Above all, a sound business plan and proposal are essential to achieve your targeted goals and ensure overall success. 

 

Looking for more business advice? Check us out for more financial tips and guides.

 

This article is brought to you by CIMB as part of our ongoing efforts to raise the level of financial literacy among Malaysians. Financial knowledge and understanding are key to making well-informed and meaningful financial decisions towards positively improving welfare and well-being of communities. This is one of our many efforts to achieve CIMB’s purpose of advancing customers and society.