This is a continuation of Basic Business Plan Blunders to further fine tune your business planning skills. While it is tragic to see some small businesses fail because of poor business planning, their experiences serve now as our guide to better our approach.

If you already have a business plan, it would greatly help if you print it and see if you made some similar blunders mentioned here. This is a good way to appreciate and apply the ideas cited in this hub.

Sloppy Presentation

What you say is as important as how you say it. It means a good business plan is a combination of form and content. Even if you know it all it does not mean it will be a good business plan. Some entrepreneurs are knowledgeable about their products, competitors, market trends, and business operations. While these things are the backbone of your business plan, how you present it to investors, lending institutions, suppliers, and customers is very important.

Simple things like margins, use of accurate graphs, inappropriate headings, too much technical or business jargons create an impression that you are not very organized even in simple things. This is very crucial because you have to gain their confidence before you get any funding or business approval.

I suggest you follow Guy Kawasaki's 10/20/30 Rule of Powerpoint. According to experienced and very popular venture capitalist, you have to use at most 10 presentation slides, make your pitch for 20 minutes, and use font size of at least 30. This is based on Guy's personal experience after hearing hundreds of small business presentations in his job.

Unfounded Assumptions

Starting small businesses make a lot of assumptions because it does not have prior performance to use as basis to begin with. Even the though of your business succeeding is one of the big assumptions you will use in your business plan.

A good business plan can logically explain the reasons for making such assumptions and connecting with some research or market data. If you are in retail business, for instance, and assumed that your company can get at least 10,000 customers in on year then you must have some well supported reason why you arrive with 10,000 customers and not say 12,000.

If you are making some critical assumptions in the area of marketing, forecasting, consumer behavior, pricing, and competitor reaction then you must be ready to answer all questions thrown by these interested groups.

Do not just claim that Asian shoppers prefer spicy food over European shoppers or a price increase of $2 will not hurt your business. Do not even assume that your competitors will just sit there while you lure their customers away and will do nothing to counter your marketing programs. You must have data to support these claims for you might have a wrong reading of the entire market and competition.

No Competitor Analysis

Some entrepreneurs believe they do not have competitors because they already captured a certain niche in the market or about to enter in an uncontested environment. Believing this is true, these small business owners make crazy marketing programs and price products higher.

In this world, we all have competitors. Even young children are already competing with other students to get some stars. It is rather silly to think that you are all alone in your business. Besides, there is nothing original in this world just variations and remakes!

It is now time to widen your horizon when it comes to scope of competition. In rare cases you might have any direct competitors but you should take into consideration your indirect competitors. These companies sell alternatives to your product. If you are selling air conditioning system, do not look at other air conditioning manufacturers. Try to look at the sellers of electric fans because they offer the same benefit as yours - comfort against heat.

This is the key to a very successful business launch of JetBlue airlines. Before they enter the market there are some established low-cost airlines catering to many price-sensitive passengers. If you are the owner of JetBlue you will think twice before entering this market.

Instead, JetBlue redefined the meaning of "low-cost" by looking at the indirect competitors - bus and coach. Some airlines are classified "low-cost" because they cheaper compared with leading airlines like United and American. Yet, this is still expensive in the eyes of coach and bus passengers. JetBlue came up with a price competitive with buses and railway plus the promise of faster travel time. This idea has propelled JetBlue to become one of the best and most innovative airlines in the country.

If they did not consider the indirect competition, they will just be victims of big airlines. The same concept is applicable to your business. Consider your indirect competitors as direct competitors for they can snatch your customers if you do not pay attention.

No Risks

Other entrepreneurs are blinded by passion and to a point, obsession. This prompts them to think that there is zero risk involved in doing their business. In spite of everything, these entrepreneurs believe in their ability to make their ventures profitable.

With this mindset, they are not prepared to answer one of the defining questions in business, "how will you manage risks?"

The reality is there is always risk involved regardless if you are in real estate, retail, professional services, online business, and other ventures. Otherwise, we will all be business owners and not employees! Wake up and identify the risks in your business. More importantly, always prepare to answer questions in this area.