Top Ten Traps to Avoid When Writing Your Business Plan

 There are major “traps” to avoid when preparing your business 
plan whether you are an expanding, successful business or a 
startup, regardless of your experience, education, or the size of 
your expectations in terms of goals and mission. We will guide 
and coach you to avoid these traps and more, thereby limiting 
the time and money you spend to achieve your goals.

1.    You are so close to your business that you often assume 
people know the important things you know about your 
industry and company. Thus, you may not define items 
such as the competition or industry resources appropriately 
or sufficiently in your Business Plan or Executive Summary.

2.     Business Plans are often too long and missing a concise 
Executive Summary, which needs to be a standalone 
document that can also be separated from the Business Plan. 

3.      Most potential lenders only want to read an Executive 
Summary, and then, if interested, they will ask for the 
complete Business Plan. For startups and existing 
companies with established relationships and an existing 
good bottom line, an Executive Summary and a short version 
of the Business Plan are often enough, and the complete 
Business Plan and more specific details can follow if needed.

4.     Internal Projections usually fall far short in addressing the 
needs and expectations of both a senior executive at a lender 
and their “bean-counter” or an investor and their trusted 
accountant.  See Forecast and Financial Presentation and 
Sources and Uses of Funds for more information on 
expectations of investors and lenders. 

5.     Projections almost always have to be revised a number of 
times based on input from lenders, investors, and their 
accountants and consultants.  Utilizing the appropriate format 
and providing sufficient details and footnotes on assumptions 
will allow edits and revisions on an expedited basis that can 
suit a single investor or bank and result in a quick turnaround 
once there is an expressed interest.  We will ensure that you 
avoid the trap of insufficient detail and inappropriate formatting 
in Excel worksheets and customize the data to present your 
strengths to the best advantage. 

6.     You may use templates, which usually provide too much 
unnecessary information, when Sections and Subsections 
of the Business Plan would better fit your business.  Often, 
when companies hire business consultants to finish their 
Plans, editing, removing, and/or inserting appropriate 
language in the Sections can involve as much or more work 
than starting from scratch.  While templates are better than 
nothing, they typically fall far short of your business needs, 
resulting in a Business Plan that does not reach the 
company’s goals, which typically involve funding. 

7.     When you have collateral and are seeking debt, it is usually 
straightforward. However, equity placements, where there are 
potentially many investors require an experienced consultant 
and a securities attorney of substance. If you are targeting a 
single or few investors, the rules and the content of the 
Business Plan change. Sections of the Plan such as ROI, 
Exit Strategy, and Risk Factors often fall far short, leaving you 
at risk of insufficient disclosure.

8.     How much of the company do I need to give up in order to 
raise the capital that is needed to accomplish my business 
goals or mission? That is a tough question, and few answer it 
correctly because they are either too close or too confident to 
see the risk factors and do not offer enough equity to get funded,
or, worse yet, they offer too much when their plan dictates 
otherwise. 

9.     About Your Team - We have seen many companies offering 
new technology, offering existing services needed in a defined 
market or other viable businesses that are led by a “One Man 
Band,” a sole proprietor who either does not have key 
employee support to grow the business or lacks even key 
man insurance. Then there are established companies that 
are seeking to grow their business into new markets or offer 
new products or services without sufficient new staff in their 
Projections or Business Plan in the form of bios and/or 
attached resumes.

10.  All lenders and investors have varied expectations about when
and how they receive an initial package of information.  It might 
include an Executive Summary only, an ES with Sources and 
Uses for Funds and Summary Projections, or a complete Plan
that may include a Market Study and many other Exhibits.   Do 
not overwhelm interested investors or lenders with too much 
information.  An ES and BP can easily be structured to be 
provided on a staged basis depending on the interest level and 
be provided in a hard copy and/or PDF file, depending on the 
wishes of an interested party.