Avoid These Common Business Planning Mistakes
Most Small Businesses are started and operated by entrepreneurs with an innovative and smart idea coupled with a deep passion to succeed.
Small Business owners are generally aware that a Business Plan is a necessary foundation for the success and survival of the business. However many Small Business owners do not have a Business Plan because they cannot find the time to prepare one, having jumped into running the business without doing the ground work of planning.
Alternatively, if they have a Business Plan, often it is unrealistic, out of date, not specifically prepared for the real life business or unworkable.
A good Business Plan should:
Outline where the business is at today
State the business objectives
Detail the practical action steps required to the stated objectives
In developing a Business Plan, it is easy to make mistakes and not consider important elements that are crucial to make it workable such as:
Analysis of the market and competition
Strategy for marketing and sales
Risk management
Importantly, financial management
Some hints to avoid the common mistakes in preparing your Business Plan
Develop clear business objectives
In preparing the Business Plan, it is easy to get caught up with the process of planning the business that you get lost in the details and forget what you are planning for.
Take a step back and outline:
A clear Vision for the business.
The basic Values which will drive all decisions and actions.
A Mission Statement.
Objectives with priorities for the short term and the long term.
Never forget your customers
Often many business owners assume that they know precisely what their customers need. Fundamental to business success is learning all you can about your customers and tailor your Marketing and Sales Strategy reflecting their needs and desires.
Don't Underestimate Competition
It is common to get infatuated with your products/services and fail to take existing competitors seriously. Competitive Analysis can reveal a lot of information about what has sold and what has not sold in the market place. It can also help identify areas of opportunity.
What Makes You Unique?
Make sure you learn from the strengths of your competitors, identify their weaknesses and use them in your Business Plan to improve your business. Determine what is going to be different, better or unique about your business relative to the competition.
Plan for the Unexpected
Your Business has to be flexible to allow for the unexpected, such as changes in family circumstances or key employees leaving the business. These may impact your Budgets and Marketing Plans. Be ready to accept that some business practices that have worked well may need to be modified or some times even given up.
Budget Realistically
Budget and Cash Flow Projections are the backbone of a Business Plan. It is vital that your Budget takes into account all other key elements of your Business Plan. For your Plan to be realistic, remember that it should reflect a clear understanding of your industry, market situation, competitors and most importantly, customers
Don't be afraid to take Risks
Writing a Business Plan is not about avoiding risk. It helps to understand and manage the risk factors, anticipating probable challenges and including various scenarios for overcoming these problems. Your Plan can help clarify and understand the distinction between a calculated risk and reckless adventurism.
Take a Second Opinion
Constructing a Business Plan can be a lonely exercise. Therefore, seek a mentor or adviser who can study your Plan dispassionately and highlight weaknesses or omissions that may have missed your attention.
Employee Rewards
Establishing a successful business demands sustained hard work and diligence from you and your employees. Include, in your Business Plan, some tangible rewards/ incentives as a motivation, beyond the satisfaction of a job well done.
Keep the Business Plan a “live” document
Your Business Plan is your blue print of the business. Periodic review of the Plan (ideally monthly) will greatly help you to understand if you are on track, highlight critical issues and allow you to make any necessary corrections in a timely manner. In this way, you can keep your Business Plan updated to reflect the business progress or any changes in business circumstances.
Remember:
Business Plan is a road map for your business journey and not its destination.
“Failure to prepare is preparing to fail”.
If you would like to learn more about how to put together a Business Plan that works, give the team at ClientEdge a call today.