Business Plan Mistakes

Business Plan Mistakes-78
The following is a list of mistakes – in layman’s terms – that people can make when compiling a business plan.– Misunderstanding the purpose: you shouldn’t write a business plan to simply create a meaningless document; writing a plan becomes part of the management process, which assists you in setting specific goals, establishing measures of progress, tracking your progress and following up with necessary changes – Writing the plan all at once: you’re never going to be able to write a business plan all at once; instead, try writing it piece by piece (or section by section); if you take the time to focus one step at a time, it will be easier for you to focus on that content instead of thinking two steps ahead – Finishing the plan: your business plan should be a living document that changes based on changing assumptions and goals; it should not be a finished product, but a work in progress – Hiding the plan from your team: sharing the overall goals (and measurement process) with your team is important to build collaboration, encourage brainstorming, and can boost team spirit; however, if there is sensitive information such as salaries included, you may want to keep that part confidential – Confusing cash with profits: because there is a huge difference between the two, it’s important to remember that profits are an accounting concept (cash is money in the bank); waiting for customers to pay you can damage your financial situation since you don’t pay your bills with profits – Diluting your priorities: when writing a plan, be sure to stress a few priorities (no more than three or four) because it’s easy for people to understand; if you touch on many different priorities, it could cause confusion – Overvaluing the business idea: a standalone great idea does not necessarily make a great business – the business plan needs to reflect and detail how the components of the business come together as a whole to support the idea – Fudging the details in the first year: details can include the financials, milestones, responsibilities and deadlines outlined in the business plan; be sure to be specific when writing a plan – include details about what is supposed to happen (and who is responsible for each task) – Sweating the details for later years: the monthly accounting details are important in the very beginning (within the first year), but due to the changing market, it becomes impossible to project monthly cash flow a few years in the future from when you write the plan – Making absurd forecasts: if you forecast unusually high profitability, it indicates that you don’t have a realistic understanding of expenses; be sure to project realistic numbers in your financials When writing a new business plan, or revising an existing one, compare this list to your content and identify any possible problems up front.• Investors: Are they friends and family, angels, venture capitalists or strategic corporate investors? Repayment: Over what timeline and from what source (ongoing earnings, sale of assets? • If not, how will you mitigate the gaps in management experience? Inadequate Customer Definition and Competitor Analysis The business plan is your opportunity to really make sure you understand your customer and competition yet one of the biggest business plan mistakes is the lack of effort in really understanding customers and competitors. • Competition Demonstrate your knowledge of the competition, how you are keeping track of them (latest product offerings, price discounts, marketing etc.) and how you differentiate yourself from them. Defensiveness or Inability to adapt to Feedback Show drafts of your business plan to business advisors, senior management and other key employees.

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Here are what I think are the 7 worst business plan mistakes with a checklist to fixing pesky business plan mistakes. Failure to Focus on the Market • Strive to be market driven (meeting customer needs) rather than technology driven.

The potential of the marketplace and resulting revenue/earnings is far more important than your product’s technical features.• Demonstrate the users’ benefit rather than promoting the product’s virtues and innovation.If the product can provide significant cost savings to clients (e.g., a pay-back period under two years), this translates to a significant user benefit. It forces you to analyze your business from the inside out and to really think about the need in the industry, what makes this business unique in the market, and most importantly, the financials behind the company.Because writing a business plan can be stressful enough, it’s always good to know what issues others have encountered so you can avoid the same difficulties.While these are all fundamental pieces of a business plan (and you should definitely do them), there’s a little more to it than that.A stellar business plan spreads a little magic, leaving its reader eager to get involved.The following is an excerpt written by Tim Berry, president of Palo Alto Software, Inc., which compiles a list of the most common mistakes that people make when writing a business plan.Top Business Plan Mistakes To avoid making these common mistakes, you must first become familiar with them. We (Oath) and our partners need your consent to access your device, set cookies, and use your data, including your location, to understand your interests, provide relevant ads and measure their effectiveness.Oath will also provide relevant ads to you on our partners' products.

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