PPP Development Stage – Preparing Business Plans
14.3 What are the common mistakes in preparing business plans?
Here is a list of the 10 most common problems associated with
business plans. These must be avoided.
1. No clear plan for progress
It must be made clear to the reader what the business is and
that the goals outlined in the plan can be reached. Broad
unsubstantiated statements such as “It is a known fact that…” must
be avoided. If a statement cannot be substantiated with good
solid data, it should not be made. Many businesses describe where
the business is at the present, but do not give any step-by-step
method to move forward. Vague ideas, circuitous statements and “shot-in-the-dark” guesses
should be avoided.
2. Failing to describe the service in layman’s terms
It pays to be clear and to write the plan in simple language.
Industry jargon must be avoided as much as possible. Lenders
will not be inclined to approve a loan or provide financing
if they cannot understand precisely what the partnership
3. Lack of market and competitor
The partnership must know where its market niche lies and it
must know its competition. Where possible, competitors must be
listed and their strengths and weaknesses identified. Every business
or partnership has a competitor so to say that there is no competition
in a business plan is almost a sure predictor of failure.
4. Incomplete financial information
Sufficiently detailed financial information must be provided
so that a reviewer can make estimates about accuracy. This
information must include clear and complete assumptions that
form the financial plan. Actual figures must be shown if they are
available. The numbers must make sense and need to be reviewed
by the taskforce making the business plan to ensure consistency
in all sections.
5. Huge appendices
The business plan should include supporting materials such
as brochures, technical papers, résumés of key
managers and summaries of market research studies. However, the
idea that a heavier document is more impressive does not work
here. Care must be taken not to go into too much detail.
6. Bad grammar
Nothing turns off a prospective investor faster than a poorly
written business plan. Internal quality assurance needs
to be performed on all sections of the business plan to ensure
7. Too little detail
Some people write four-page plans and think that there is nothing
more to say. Other people think that partnerships or businesses
do not need plans and that everything can be done from
the head. If a partnership wants to find an investor, the plan
must be well written and sufficiently detailed.
8. The overall plan is too long
There is a need to avoid being excessively wordy in the plan.
Forty pages or less is ideal for attracting investors;
eighty pages is definitely too long, especially if it its essential
content can be reduced to just 15 pages. There is a need
to stick to the facts, stating them clearly and not repeating
them unnecessarily. The goal is to write a good business plan,
not a long one.
9. Overuse of acronyms
The use of acronyms in the plan must be limited as much as
possible, otherwise readers will have to keep on going
back to reread definitions. If the full name is too long and tedious,
renaming may be an alternative solution.
A business plan must be planned carefully with each fact and
sub-plan existing in only one place – the place where it
best illustrates what is being said. People who read business
plans appreciate brevity and view it as an indication of the
ability to identify and describe in an organised manner the important
factors that determine the success of the partnership.
◊ No clear plan for progress
◊ Poor description of service
◊ Lack of market research
◊ Incomplete financials
◊ Huge appendices
◊ Bad grammar
◊ Too little detail
◊ Overall plan is too long
◊ Overuse of acronyms