Creating a business plan can be a painful process, so if you are going to go through the pain it doesn't really make any sense to not do it properly.
Cutting corners, or playing with the numbers to make them look better is not only unprofessional (and a bit shonky), it is ultimately pointless as it will render your business pretty much useless.
The whole point of business planning is to work out whether or not your business idea is viable.
Can you make any money with in this business with the business model that you are proposing. The business planning process will only be helpful if you actually do the work.
Analyse your market, refine your product offering based on consumer preferences, get your production processes right and work out how you will interact in your competitive environment and you might have a shot at making it through the first year in business without wasting a lot of time and money and utlimately going broke!
Common Business Plan Mistakes
So what are some of the more common business plan mistakes? Glad you asked, here are a few things to avoid when you are working on your business plan...
Not Writing for the Right Audience
Who will be reading your plan? You need to write the plan with the needs of your target audience in mind, and if you are intending to share your plan with more than one target audience, then maybe you need to have several
versions of your plan.
You might create one for financiers or commercial investors and one for family and friends who are thinking about
bank-rolling your business. Or maybe you need another one for your employees. The one you create for yourself, that you will use to manage the business will be less polished but have more depth in your operational, financial and management planning sections, with tighter performance targets and detailed corrective measures for any deviations to the plan.
If you do create more than one version of your plan, just be careful that you don't hand out the one for your family to the local bank manager, or
give the financier plan to your employees!
No Research to Back Up Your Claims
Do the research. I can't be any clearer than that. If your prospect asks just one question about the claims you make in your
business plan and you are not able to answer them, it is all over. This common business plan mistake is easy to avoid, you just need to -
research, analyze the data and understand what it means, before you put anything
down on paper!
Click here for more information about Small Business Market Research
Over-estimating the Value of Your Business Idea
Do you have a good business concept?
If it is a new idea, or you have developed a new product or an improved
method of delivering an existing product to your customers, you need to
demonstrate that your assumptions about the demand are reasonable.
This is the very core of your business plan.
If you make this type of business plan mistake and over estimate the value
of the product or service in the market, none of your strategies, goals or
objectives are likely to be achieved.
No value = no sales = no profit, no matter
what your plan says.
All Flash and No Substance
Is your business plan going to be printed on high quality glossy paper with
custom designed graphics? Have you selected an expensive binding?
You are better off spending the money on obtaining high quality data on your
industry or paying someone to put together your financial data for you. Most of
the people who read your business plan are unlikely to be impressed with the
presentation if the content is not substantial and designed to answer their
questions about your new business.
Having said that, you do need to pay some attention to the presentation. Spelling, grammar, page layout are all important if you intend to share the document with anyone else.
You need to make your document
as easy to read as possible and regardless of how well you think you write, investing in someone to proof read your plan for you is a good idea. One of the tricks our minds play on us is that we tend to "read" what we think we wrote, rather than what is actually on the page.
Inconsistent Use of Data
If you say that you are expecting $100,000 worth of sales in your first year
of operation in the section about your sales projections, make sure that number
is reflected in your profit and loss forecasts as well.
If you are planning to offer credit to your customers make sure that the cash
flow projections recognize the cash coming in at the end of the credit period
rather than when you make the sale.
These are just two examples of how an inconsistency can occur in your
business plan. Inconsistency is a fatal business plan mistake and can mean that you are doomed to failure before you even start. Check and
re-check everything to make sure your plan flows and actually make sense (find a proof reader with a critical eye to check your information flows throughout the document).
What ever you do not get creative with the numbers!
When you are starting a small business the primary reason for writing a small
business plan is often to use it to seek funding. If this is your reason for creating a business plan you should bear in mind that the people who will be looking at it
will have a lot of experience with reading proposals for new businesses.
probability they will have knowledge of the industry, not to mention experience
with business management. If they are good at what they do, and you need them to
be, they will know their stuff when it comes to accounting for business. They will spot any creativity in your numbers a mile off!
And if you are creating the plan to help you manage the new business, making this kind of business plan mistake is just silly.
Seriously, who are you trying to impress? Being creative with the numbers when you are the only one who will see the plan is just a form of self-defeating delusion. You need to have a clear understanding of how your business should operate - warts and all - if you have any hope of succeeding. So save the creativity for product development or relationship management. Creative solutions for real issues are good, creative accounting is bad...
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