Business Plan Mistakes

It can seem to be a daunting process when you begin, or think about beginning writing your business plan so without further ado here are the first list of common business plan mistakes and how to avoid them.

Not Doing Anything

When most people think they have to begin the process of completing their plan they simply put it off. For many business entrepreneurs just the thought of writing puts most back to the stage they are at today, ie: nowhere. For others they only start the process when they are asked to by their bank and really this is not good enough !

Even if you don't need any cash up to around 80% of new businesses fail in their first three years because they did not have a business plan that made sense. In reality it should only take a day or so to put your ideas down in the right format and complete the document.

Having Over Optimistic Financial Projections

Perhaps this is the biggest mistake of all. We all think our idea is the best since life began but only a few businesses really make it big. You should be realistic when you decide on the level of sales and profit margins you are going to make in your first 12 months. If you are entering a market with many competitors you will have to show why you are going to take market share off them and why customers will buy your products over your competitors.

Cash is king

There are plenty of stories about profitable businesses failing because they run out of cash. Both forecasting your receipts against payments as well as having back up credit and loan facilities is something a new business must plan for. Chasing your customers to get paid on time is critical as well as managing how you are paying for your purchases. Managing your cash flow is important as marketing and selling.

Being the Best is Not Good Enough

What is best ? When developing your mission and objectives you should have some specific goals in mind. ie: to take 10% market share or to sell x number of products. When you have a thriving business you can concentrate on other things like the timliness of answering telephone calls and having better customer services. Just being the best will not cut it in the tough world of business.

Doing Too Much - Having Too Many Objectives

It's all well and good putting down your plan of actions because most people want to do everything but if you only have a few people on your staff role once you start serving customers and dealing with the day to day running of your business you just won't have the time to do everything as there just won't be enough hours in the day. So when you look at the things you want to undertake why not put a return on investment of each objective you have. That way you know that by completing task A will reward your business with a certain amount of profit whereas another task might only perform at 70% of task A. Prioritisation is important as well as only developing perhaps 6 or 7 key objectives for any time period.

You Don't Have The Time

Many people just don't put a business plan together because they don't feel they have the time to dedicate to it. It's only after a few months where their customer base is low and the sales are not coming in then they might think more about it. The good thing is that most good business plans for small businesses only need to be around 20 pages in length and because you will have all the information at hand it should not take too long to prepare - perhaps only a day or two at the most.

Getting it right first time can be achieved and we have put together a business planning system that takes you through each step and for some businesses has around 80% of the ground work already prepared. You can also get free software to help you from the banks although with these solutions there is limited support on how to complete each section. Many people believe paying £30 - £100 for software to write their business plan is just too much, but if it enables you to have a thriving business for five or more years the expense is negliable.