Business Plan Mistakes
As you prepare your business plan it is easy to make mistakes
or leave out important elements. Some of the most common business
planning pitfalls and some tips on how to avoid them are listed
here.
First of all you must create a vision. It is tempting to
roll up your sleeves and plunge right into the details of your
business: evaluating products, studying market segments and
sizing up your competition. Yet it is possible to get so caught
up in the process of planning a business that you lose sight
of what you're planning for.
Before you get lost in the details, take a step back.
Outline a clear vision and a coherent set of values for your
company. Develop a mission statement and use it to define short-term
goals and priorities. Once you have a clear road map for your
business, you can plan your journey with more confidence.
A budget isn't the same thing as a plan. You can create a
solid business plan without a budget and a financial forecast.
A budget should be the product of all the other elements in
your plan. If you don't have a clear picture of your industry,
customers, competitors and market conditions before you develop
a budget, your numbers aren't likely to reflect reality.
Don't ignore your customers. This may sound obvious, but
too many entrepreneurs assume they know exactly what their
customers need without bothering to ask. Take the time to learn
about your customers, and build your business plan around their
needs and desires.
Don't shortchange the competition. If you assume your firm
will be the only game in town, or if you fail to take existing
competitors seriously, you're asking for trouble. Your competitors
can be a great source of information about what works and what
doesn't.
Be prepared to take risks. Creating a business plan isn't
about avoiding risk; it's about understanding and managing
risk. That's why a good business plan anticipates possible
challenges and includes a variety of scenarios for meeting
those challenges. There's a difference between a calculated
risk and recklessness, and your plan can help you make that
distinction.
Get a second (or third) opinion. The most experienced entrepreneur
can still benefit from a different point of view. Even if you're
the only person involved in your business, find someone who
can study your plan objectively and point out possible weaknesses
you might have missed.
Expect the unexpected. Every business plan needs some wiggle
room to allow for unexpected changes. Part of this involves
creating budgets and marketing plans with some built-in flexibility;
but adapting to change also requires you to accept that you
might have to modify or even abandon business practices that
worked well in the past.
Don't forget what makes you unique. A cookie-cutter business
plan might help you get started, but it won't help you succeed.
And while it helps to look at your competitors, don't model
your business after them. After all, you're in business to
beat the competition. Learn from your competitors' strengths,
but also learn how to spot their weaknesses and use them to
improve your own business plan.
What's the point? Building a business involves hard work
and struggle. But it should also include a clear set of rewards,
both for you and your employees. When you set goals in your
business plan, include some concrete motivation that goes beyond
the satisfaction of a job well done.
Don't skip the plan! Of course, the biggest mistake of all
is failing to create a business plan in the first place. Planning
is hard work, and there's no guarantee it will make your business
succeed. But a good plan is still the best way to turn your
vision into a realistic, coherent business.
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