Project report or business plan is a written statement of what an entrepreneur proposes to take up. It is one kind of course of action about what the entrepreneur hopes to achieve in his business and how is he going to achieve it.
The entrepreneurs often make errors while formulating project report. The common errors are as follows:
(1) Product selection: Some entrepreneurs commit mistakes by selecting the wrong product for their enterprises.
(2) Capacity utilization estimates: Some entrepreneurs make over-optimistic estimates of capacity utilization.
(3) Market study: Most of the entrepreneurs do not study their market before preparing a project report or business plan. As a result, their business plan cannot be successful.
(4) Technology selection: Entrepreneurs sometimes plan for technology not possible to set up within limited financial resources.
(5) Location selection: Entrepreneurs often make two types, of errors while selecting a location; a) they are completely influenced by the Government offer of financial incentives and concessions; b) they sometimes select a location merely because it is near to their home.
(6) Selection of ownership form: Many entrepreneurs fail merely because the ownership form of enterprise is not suitable, i.e. they sometimes select a partnership project where sole-proprietorship is suitable.
So, these are the various mistakes or errors in project formulation.