While every business is different, business owners share many common traits. As a result, they often make the same mistakes as they work on their business plan. Here is a list of the ten most common mistakes :
- No Plan – It is easy to put off writing a business plan until you have no choice because your banker, investor, or potential landlord requires it. Unfortunately, that is the worst time to try and write a plan.
- No Clear Audience – Why do you need a plan? Are you writing for the banker in hopes of getting a loan, or a potential investors or simply to guide your business. While the outline is the same, the amount of detail required in each section varies depending on the audience.
- Too Much Detail or the Wrong Type of Detail – Can you boil down the description of your business to a simple message without getting bogged down in the details? Limit your product description to an overview, focusing on the problem your product solves and its unique features/ Remember to leave out the jargon and industry slang.
- Poorly Defined Customer – Everyone is not your customer. With a clear, specific definition of your target customer, it is easier to write a clear, specific plan.
- Limited Market Research – Just because you love your product or idea, it does not mean anyone else will. (By “anyone,” I mean anyone other than your mom, spouse, or best friend.) Who are these people, and what will make them buy?
- Underestimating your Competitors – Everyone has a competitor. Even truly innovative products must deal with competing products or services which may or may not solve the same problem, but ultimately will compete for the end customer’s available resources.
- No Meaningful Goals and Milestones – What will you accomplish? Be specific. How long will it take you and how will you measure your progress along the way?
- Activities Not Tied to Goals – Your goals form the basis of other decisions. Use the planning process to eliminate activities which do not move you closer to your goals.
- Unsupported Financial Projections – Unrealistic financial projects with a hockey-stick-shaped growth curve, set up a business for failure when owners spend too much too soon without enough cash reserves to help the business through the startup phase. As you develop financial projections, consider two scenarios: a best case and a worst case.
- Inadequate Consideration of Pitfalls – Stuff happens! Things go wrong. When the worst happens, will you be prepared? Having an adequate assessment of risks is not being negative — it is being prepared.
- Failure to Communicate – I know, I promised a list of the ten most common mistakes, (but don’t you like getting the little extra from time to time? ) While not directly a part of your document, poor communication will have a detrimental affect on your business. As you write your plan, involve others. Seek advice from people you respect. Talk to employees, family members, business partners, and advisers, such as your accountant and lawyer.
Need help getting your plan started? You can download a free copy of my business plan outline