Stylistic Mistakes
Poor spelling and grammar
If you make silly mistakes in your business plan, what does that say about how you run your business?
Use your spelling and grammar checkers, get other people to edit the plan, do whatever it takes to purge embarrassing errors.
Too repetitive
All too often, a plan covers the same points over and over. A well-written plan should cover key points only twice: once, briefly, in the executive summary, and again, in greater detail, in the body of the plan.
Appearance matters
At any point in time, an investor has dozens if not hundreds of plans waiting to be read. Get to the top of the pile by making sure that the cover is attractive, the binding is professional, the pages are well laid out, and the fonts are large enough to be easily read.
On the other hand, don't go too far—you don't want to give the impression that you are all style and no substance.
Execution Mistakes
Waiting until too late
The capital formation process takes a long time. In general, count on 6 months to a year from the time you start writing the plan until the time the money is in the bank.
Don't put it off. Your management team should be prepared to invest about 500 hours into the plan. If you are too busy building your product, company, or customers (which is arguably a better use of your time), consider outsourcing the development of the business plan.
Failing to seek outside review
Make sure that you have at least a few people review your plan before you send it out—preferably people who understand your market, sales and distribution strategies, the VC market, etc.
Your plan may look perfect to you and your team, but that's probably because you've been staring at it for months.
Good, objective reviews from outsiders with a fresh perspective can save you from myopia.
Overtweaking
You could spend countless hours tweaking your plan in the pursuit of perfection.
A lot of this time would be better spent working on your product, company, and customers.
At some point, you need to pull the trigger and get the plan out in front of a few investors.
If the reaction is positive, and they want to move forward, great.
If the reaction is negative (assuming that the investor was a good fit to begin with), then you may have been heading down the wrong path. Get feedback from a couple of investors, and if a general consensus emerges, go back and refine your plan.
Conclusion
It's a tough investment climate, but good ideas backed by good teams and good business plans are still getting funded.
Give yourself the best possible chance by avoiding these simple mistakes.
Akira Hirai is Managing Director of Cayenne Consulting, a full-service solutions provider for emerging businesses, focusing on business plan consulting and financial modeling, and working with clients in life science, software, Internet, telecommunications, and other high-tech markets.