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Often you may hear
about what a business plan consists of. While including the necessary
items is very important, you also want to make sure you don't commit any
of the following common business plan mistakes:
1.
Putting it off.
Don't wait to write a plan until you absolutely have to. Too many
businesses make business plans only when they have no choice in the
matter. Unless the bank or the investors want a plan, there is no plan.
Don't wait to write
your plan until you think you'll have enough time. "There's not
enough time for a plan," business people say. "I can't plan. I'm
too busy getting things done." The busier you are, the more you need
to plan. If you are always putting out fires, you should build firebreaks
or a sprinkler system. You can lose the whole forest for paying too much
attention to the individual burning trees.
2.
Cash flow casualness.
Cash flow is more important than sales, profits, or anything else
in the business plan, but most people think in terms of profits instead of
cash. When you and your friends imagine a new business, you think of what
it would cost to make the product, what you could sell it for, and what
the profits per unit might be. We are trained to think of business as
sales minus costs and expenses, which equal profits. Unfortunately, we
don't spend the profits in a business. We spend cash. So understanding
cash flow is critical. If you have only one table in your business plan,
make it the cash flow table.
3.
Idea inflation.
Plans don't sell new business ideas to investors. People do. The
plan, though necessary, is only a way to present information. Investors
invest in people, not ideas.
Don't overestimate
the importance of the idea, particularly the importance of the uniqueness
of the idea. You don't need a great idea to start a business; you need
time, money, perseverance, common sense, and so forth. Very few successful
businesses are based entirely on new ideas. A new idea is much harder to
sell than an existing one, because people don't understand a new idea and
they are often unsure if it will work.
4.
Fear and dread.
Doing a business plan isn't as hard as you think. You don't have to
write a doctoral thesis or a novel. There are good books to help, many
advisors among the Small Business Development Centers (SBDCs), business
schools, and there is software available to help you (such as Business
Plan Pro, and others).
5.
Spongy, vague goals.
Leave out the vague and the meaningless babble of business phrases
(such as "being the best") because they are simply hype.
Remember that the objective of a plan is its results, and for results, you
need tracking and follow up. You need specific dates, management
responsibilities, budgets, and milestones. Then you can follow up. No
matter how well thought out or brilliantly presented, it means nothing
unless it produces results.
6.
One size fits all
Tailor your business plan to its real business purpose. Business
plans can be different things: they are often just sales documents to sell
an idea for a new business. They can be detailed action plans, financial
plans, marketing plans, and even personnel plans. They can be used to
start a business, or just run a business better.
7.
Diluted priorities.
Remember, strategy is focus. A priority list with 3-4 items is
focus. A priority list with 20 items is something else, certainly not
strategic, and rarely if ever effective. The more items on the list, the
less the importance of each.
8.
Hockey-stick shaped growth projections.
Have projections that are conservative so you can defend them. When
in doubt, be less optimistic.
Articles courtesy of Palo
Alto Software, Inc.
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