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Learn2 Write a Business Plan (continued)
Step 11: Avoid common pitfalls

People who read business plans say they see the same mistakes over and over again. Here are some problems to avoid:

Rose-colored glasses. Make sure you don't overlook potential risks. Investors are going ask a lot of what-if questions. Beat them to the punch by explaining how you'd react to specific problems.

Unsubstantiated claims. Don't just say "Widget sales are rising quickly." Give specific figures, and quote your sources.

Over-optimistic sales projections. You can't just assume sales will grow simply because you remain in business. Explain how you're actively going to expand your market.

Unrealistic cash flow projections. New companies (and established ones) are frequently strapped for cash even when business is good. This can be especially problematic for fledgling ventures since they don't yet have the perfect confidence of creditors.

Numbers that don't add up. If your balance sheet doesn't square with your income statements and cash flow projections, you're going to cast doubt on your entire plan. Make sure all your numbers, calculations, and financial statements are sound.

Deer in the headlights. Make sure you understand every part of your plan, including the financials. Don't just refer investors to your accountant. They'll think your accountant could be robbing you blind--and they might be right

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Step 1: Understand your audience
Step 2: Prepare to research and write
Step 3: Outline the essentials
Step 4: Detail the investment opportunity
Step 5: Analyze the company and industry
Step 6: Address the market
Step 7: Explain how your business will run
Step 8: Introduce the management team
Step 9: Prepare a financial plan
Step 10: Provide source materials
Step 11: Avoid common pitfalls
Step 12: Proofread your work