Avoid these 5 common business plan mistakes

You've worked hard to put together a business plan for your new venture. You've followed expert advice and included sections that address your business and industry, your strategy for reaching your goals, your products and competitors, your marketing plan, your management team, and the money you'll need.

And now you're ready to share your business plan with banks and potential investors.

Before you present your plan, watch out for these common mistakes that can destroy your chances for funding, even if you've got a great idea that should be destined for success.

1. Poor grammar, spelling, and punctuation

Investors and bankers tend to notice misspellings, typos, and punctuation errors right away. These mistakes can signal that you are careless, do shoddy work, or pay attention to details. They create a bad first impression that can quickly land your plan in the rejection pile. Have someone skilled at proofreading look over your plan before you present it.

2. Too much information

You wouldn't be an entrepreneur if you weren't eager to talk about your business idea, and yet it's easy to get carried away with irrelevant information or technical details. This is especially true if you're in a tech-related business.

Investors need specific information about your products and services, but they may lose interest if your business plan wanders off into your life story or reads more like a technical handbook.

A typical business plan runs from 15 to 25 pages and should include an executive summary that provides a quick overview of your plan as a whole. If your plan needs to be much longer, consider putting some details into an appendix or supplementing your full plan with a shorter version you can use for making presentations.

3. Not enough information about risks and competition

Simultaneously, hardly anyone likes to talk about the competition or the risks involved in a new venture. A surprising number of business plans claim there's no competition at all.

Resist the temptation to gloss over the downsides—assess your competition realistically and explain how your product or service is different and why people want it.

Also, include detailed financial projections and industry information that is grounded in facts. Provide a basis for any assumptions you make. Take the time to do the research and assemble a full picture of your business and the reasons it is poised for success.

4. Unclear or unfocused writing

When you're close to a project, it can be surprisingly difficult to describe it in a way that outsiders can understand. You may neglect to say what your product is or what it's used for without realizing it.

Or you may use acronyms and industry jargon without explaining what the terms mean. A related problem is rambling, or sections that bounce from one thought to another, making it difficult for readers to follow.

Investors see lots of business plans, and, if yours isn't easy to understand, they'll quickly move on to the next one. Show your business plan to someone who isn't involved in your project and who isn't in your industry. Ask them for an honest assessment—if they find it hard to follow, make revisions, so your plan is crystal clear.

5. Formatting issues

It sounds like a picky point, but details like fonts, headings, and formatting make a difference. Your goal is for your readers to believe in your business and give you money.

Make things easier for them by using an easy-to-read font, large enough type, and tables of contents and headings to guide them through the document.

Make sure your fonts and formatting are consistent throughout your business plan. Inconsistency looks sloppy, and that reflects badly on you. If your computer skills are lacking, hire someone to clean up the document and make it look neat and orderly.