Here are some common mistakes often made in preparing a business plan:
Too much or too little information. This is explained in Business Plan Basics.
Hiding weaknesses. One of the more difficult aspects to deal with in writing a business plan is addressing problems or weaknesses. Although you want to put your best foot forward showing the positive side of the business, ignoring or glossing over negative issues could be potentially damaging. A savvy investor or lender will most likely find any weaknesses anyway and if you haven't already addressed them you will lose the element of trust and potentially the opportunity. The best way and really the only way of properly handling problems and weaknesses is to get them out in the open and to have a detailed and well thought out action plan that effectively addresses each of them.
Competitive Analysis. The operative word here is analysis. Listing the name and address of your competitors is not a competitive analysis. The investor is interested in knowing what you know and expect to see from your competitors, both near term and longer term. What is their strategic direction, their core competencies and what makes them tick? Why do customers buy from them? What are their strengths and weaknesses and can their weakness be exploited to your advantage? Knowing little or nothing about your competition is evidence that you have not done your homework.
Improper assessment of risks. Risks are different than weaknesses in that they deal with the future and are normally outside the realm of your business. Not addressing them is just as bad as hiding weaknesses. Are there market forces that could prevent your plan from being successful, such as new technology, changes in consumer demand or other issues that could negatively impact your business?
Lack of analysis and support data. It is unlikely that anyone will invest in your business based solely on your 'best guess' of revenues and net income. There is a very strong correlation between the amount of analysis and research data that you have to support your projections and the likelihood of success in securing funding. This does not necessarily mean that you need to spend months and thousands of dollars on surveys and market research. What it does mean is that you should have and be able to provide convincing rationale for how your projections were arrived at.
Forced planning. Don't wait to write a business plan until you absolutely have to. Too many businesses prepare business plans only when they have no choice in the matter, such as to support a funding request, and then hastily put one together without spending the time needed to properly think through all the planning process.
Ignoring the importance of cash flow. Cash flow is arguably more important than sales, profits or anything else in the business plan, but most people think in terms of profits instead of cash. A business could be making a profit yet go bankrupt due to cash flow problems so understanding cash flow is critical.
Inflated expectations. Be conservative in your projections so you can defend them. Unreasonably high projections that cannot be easily defended will shed doubt on your entire business plan.
Hype and vague goals. Avoid flowery language and hype, such as "our goal is to be the best". The objective of a business plan is results so you need to focus on specifics and how you intend to achieve them. Be realistic.
Cook book approach. Although it is a good idea to read other business plans to obtain ideas and become familiar with the planning process, it is unadvisable to simply copy them and change the numbers, etc. Not only will you loose the benefit of the business planning process but you additionally run the risk of the reader realizing what you have done. Each business is different with a unique set of circumstances so a business plan should be custom prepared and tailored to meet it's needs.