Every founder of a business deals with the creation of a business plan at least once in his or her life as a founder. However, it is more likely that you will pen many versions of your business model in your corporate career. Many specialist areas and methods have to be relearned. But many mistakes in the design and creation of a business plan can be avoided . After all, this is an effective way to save time and nerves.
Many sources of error, one goal: The complete business plan
Most business founders are faced with the task of creating a concise and easily understandable business plan when applying for a development loan. The scope of the business plan is usually as intimidating as a doctoral thesis. A lot has to be learned so that the business plan can also stand up to the bank. To ensure that the most common stumbling blocks can be skipped over, the 15 most important sources of error when creating a business plan have been summarized:
- Wrong mindset : As described above, founders usually deal with the topic of business plans when financing is pending. But it is much more important that you write a business plan primarily for yourself and thus prepare yourself for the future as an entrepreneur. Therefore, when creating the first business plan, the business model in particular should be put through its paces. Is the customer benefit clear and what is the competitive situation like? These are questions to ask yourself very early on. When creating a business plan, what counts is a mindset that is outward-looking and willing to make adjustments to the business idea want to do. If you don’t try to take the weaknesses of the business idea into account and then allow these to result in adjustments to the business strategy, it will usually be difficult to build a successful company.
- Start writing straight away : The creation of a business plan is a comprehensive undertaking, so it is worthwhile to design the business model in less detail beforehand. Because a business plan can easily be 30 to 50 pages long. It is worth doing rough planning in the form of a business model canvas at the beginning, in order to use this as a starting point for creating the business plan. This canvas serves as an internal sketch of the business model and can be quickly adapted and thought through.
- Fuzzy executive summary : The executive summary is the flagship of a business plan, if you don’t get to the point here, you will quickly lose the reader’s interest. This summary guides you through the most important cornerstones of the business plan on one to a maximum of two pages. Here it is expected that the reader will want more and still know what it is about after reading the executive summary.
- Spelling mistakes : The best impression is given by presenting a grammatically correct document, as this is the minimum the reader expects. Of course, one or two marginal spelling mistakes are more negligible than gross errors in sentence structure or a noticeable number of spelling mistakes. If necessary, another person should proofread here.
- Presenting the founding team/founders weakly : Especially in the early phase of a company, the success of a company stands and falls with the founders. Therefore, the founding team or the founder should become aware of personal strengths, weaknesses and specialist knowledge at an early stage. Where is there a need for further training? Where does it make sense to get external services on board? A good status quo analysis of the founder know-how is essential for the smoothest possible company development.
- No scheduling: Since the business plan is divided into many subject areas, it is advisable to plan carefully. Because with the first version of a business plan, it will not only take a lot of time to write and correct it, but also to do the research beforehand. Especially the conscientious research on the competitors and the industry figures require a lot of thinking. This should be planned in stages, which are divided into thematic blocks. Nevertheless, one should also set a time limit for the research, since one can also waste a lot of time with research work. For example, the competition and industry data can be researched together and therefore these chapters of the business plan should be processed one after the other if necessary. Another example isFinancial planning can only be created meaningfully when the tables have been created and checked for errors. A general tip when planning a business plan is that the summary, i.e. the executive summary, is created at the very end.
- No sparring : It is important to have one or more partners who critically reflect on and scrutinize the business model, especially in the case of individual start-ups, but also in the case of group start-ups. This goes back to point one, because it needs outside, preferably expert, sparring partners who point out stumbling blocks and opportunities.
- Underestimating risks : It is precisely the risks that young companies have not identified that are to be tracked down. Have any risk areas been considered in detail? Are there legal restrictions or major market entry barriers? The SWOT analysis method is particularly useful here . This analysis methodology identifies the strengths, weaknesses, opportunities and risks of the business model in relation to law, the market and competition, as well as the founding team.
- Customer value is not clear : The person reading the business plan, as well as the founders themselves, should clearly understand where the customer value of the product/service lies. Does everyone realize why customers should buy the product?
- No USP : Following point 7, the unique selling proposition should be worked out in addition to the customer benefit. Known in English as “Unique Selling Proposition”, the USP describes the feature of the product that sets it apart from other products. The more everyday a product is and the lower the fundamental innovation, the more precisely the USP should be worked out. Founders should ask themselves: What sets the product or service apart from the rest of the competition?
- The competition is underestimated : A hard truth first: There is almost no business model or concept that has no competitors. Good news afterwards: That’s not a bad thing at all, because if there’s already an existing market you want to enter, the barriers to entry are significantly lower than if you want to create an entirely new market. It is essential for a complete business plan to research and present the types and number of competitors. In addition to the written explanation, a graphic representation in the form of a competition matrix is particularly useful here.
- Legal aspects are not observed : If you want to set up a company, you are bound by many laws and, above all, tax regulations. Anyone who does not deal with the legal requirements before founding the company can experience nasty and usually expensive surprises later. Therefore, if in doubt, it is worth seeking legal advice or tax advice .
- Financial planning is neglected : In addition to the business model and customer benefits, the financial plan is the heart of a business plan. If the planning is not worked out conscientiously here, we run the risk that too little is estimated, especially with the fixed costs, and work is therefore quickly uneconomical. Of course, it is difficult to look into the crystal ball and predict how much revenue will be generated. In all places where you are not sure what costs you will incur, the estimate should always include a risk buffer.
- Overly optimistic financial planning : Founders often assume relatively low costs with high sales. Of course, every company should wish for this, but this is usually not realistic. It is important to plan sales figures as realistically and conservatively as possible. It makes sense to calculate in different scenarios. A best- and worst-case scenario are particularly useful here. It is often the costs for insurance companies or external service providers that are not taken into account in the cost planning. There are some checklists that guide you through the cost planning and help you not to overlook any items. Bank advisors pay particular attention to cost planning, so no items should be forgotten here.
- No advice at the relevant points : Those who do without expert advice, especially at the beginning of the business development, have to reckon with legal consequences or high costs in the worst case. Anyone who wants to become self-employed or intends to acquire financing can get advice from a number of places. The consulting topics can range from the optimization of the existing business plan to assistance in creating a financial plan to legal advice, e.g. B. on the subject of legal form. It is important to deal with the topic of “external advice” as early as possible