Ten mistakes to avoid when writing a business plan
There are many factors to consider if you want a good business plan. Drafting a solid business plan takes time and patience. It is a process of refining ideas that are affected by the forever changing business world. Rushing the process is your worst enemy. In this article, we will look at some of the most common mistakes people make when writing business plans and how best to avoid them. It is not an exhaustive list, but it should give you an idea of what you should focus on and make sure your business plan is always up to date, well researched, and relevant.
- Postponing it to later date
Don’t delay writing down your plan until you think you have enough time. You will always be busy or something will need your attention. Putting it off will only mean you will rush through it when it’s needed. Give yourself a timetable to work on the plan. A few hours every weekend ought to suffice. A plan which hasn’t been thought out will most likely be rejected.
- Lack of target market
Not every business or product will appeal to everyone. Know and clearly define the specific target audience. Spell out how you will approach the target market and ascertain if the target market is viable and profitable. If you’re lost, enlist the help of professional number-crunchers like PushDigits who will help you with feasibility reports and financial projections. Having an expert point-of-view is important as it determines if your plan is worth pursuing.
- Not thinking of cash flow
When drafting the business plan, most people think of the profit instead of cash flow. Cash flow is critical as it determines how you acquire raw materials, make payments, and pay off bills. Explain how you get cash into the business and also have contingency plans. This shows that you’re a step ahead and thinking of keeping the business afloat and operational.
- Overemphasis on the idea
Avoid going round in circles around the idea. You don’t only need a great idea to build a business, but you do need financial backing, time, patience, and some common sense. Nowadays, a handful of businesses are based entirely on new ideas. A new idea is harder to execute since people might not understand it. Investors invest in the drivers of an idea and an idea is only as good as its executor.
- Fear of the unknown
Writing down a business plan can sound daunting but it’s not. Keep the document simple and highlight key areas. A business plan is essentially putting an idea into words and figures. There is a lot of material on the web that can assist you. You can even enlist professional companies dedicated to drafting business plans.
- Having too many priorities
Set out your key priorities. Know what to focus on and make sure these are strategic. You might be tempted to have a long list, but a shortlist (at most 5) should suffice. A long list might be overwhelming and this won’t help you to effectively deal with each priority.
- Lack of awareness about the competition
A good business plan is aware of the competition. Someone out there is already doing what you plan to do, or its alternative. Check and double-check for competitors in your market. Knowing your competition will help you have a better value product or service. That way, your customers will have a unique experience.
- Too much information
Keep it short and simple. Having too much information is a disadvantage. Usually, investors know what they are looking for when reading a business plan so avoid using too many words. Highlight key figures and keep everything else to a bullet list.
- Undefined / unclear goals
Your goals should be Specific, Measurable, Attainable, Relevant, and Time-bound – SMART. Any plan must have results and to achieve results you need to track and follow up. Your goals also act as your checklist on what you achieve.
Your projections should be research-based so that you can defend them. Don’t be overly ambitious as this can hurt you when you can’t reach your targets. Have a sound knowledge of the market so that you can predict how it reacts during different times.