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The Problems of Business Planning
As you develop your business plan, it is easy to make mistakes
or leave out important elements. We have been writing business
plans for over 25 years and here is a simple list of the most
common business planning pitfalls and some tips on how to avoid
them.
- Create a vision. It's 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's 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't create
a solid business plan without a budget and a financial forecast.
But 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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