You’ve heard the saying before – those who fail to plan, plan to fail. Cliches like the one mentioned, as well as advice from those experienced in the business game, have ingrained in your head that you need to write a business plan. Bravo to you for accepting and preparing to do so. However, simply writing one isn’t enough in most cases. You need to write a good one! Make it as complete and perfect as possible by avoiding these five, extremely common mistakes.
1. Not Writing One
We’ve already discussed one cliché, why not another… Time is money! Maybe a little light bulb went off above your head and you’re convinced you stumbled upon the perfect business opportunity for you. While there’s a great chance you’re idea will pan out fantastically, there’s also a chance you may be overly excited about starting something that’s doomed to fail. No offense – it’s a common mistake among even the most brilliant of entrepreneurs. A business plan can confirm that your idea is in fact a good one to act upon, or help you realize before investing time and money into it that it’s not going to work out the way you’re currently expecting it to.
2. Failing to Identify the Reason for Writing Your Business Plan
Although you need to create a business plan no matter what, the tone of your plan may be influenced by various factors. Identify your reasons before you start, so you include all necessary information and write from the right angle.
Are you writing the plan with the intent to secure a business loan? Then you’ll need to keep your lender and their interests (being paid back) in mind. Are you making sure you have all your bases covered? Then your plan may need to be revised several times and you may want to consider hiring an expert or collaborating with an expert. Perhaps you plan to bring investors on board. In that case you really have to sell the benefits of investing in your business, making it look as attractive as possible while at the same time being honest and realistic so as not to disappoint people who have vested interest.
3. Doing Inadequate Research
There’s a whole lot to consider when starting your business. Much, much more than just your product idea. You’ll need to know about market trends, about competitors, legal issues, etc. Plus, when writing a business plan, you’ll often identify other concerns that need to be considered and accounted for.
Many people skimp on research, and this is a big mistake. It’s common to make assumptions about a businesses’ target market, and upon further research you’ll find that a lot of what you expected just isn’t true. Knowing your customers in and out – where they live, where they work, what they worry about, what they’re willing to spend money on, how much they can spend on it, and beyond that - is how you’re going to ensure you have buyers.
4. Not Keeping Your Objective in Mind
Let’s be real - the point of most businesses are to make profit. Not just money or sales - profit. You need to make more than you're spending. Many businesses that should have their flame extinguished focus on their idea and hope more than they focus on the boring stuff that’s actually going to be the difference between success and failure.
Keep your expenses in mind before you take a single action to get your business up and running. If the numbers aren’t working out once you’ve completed all your research thoroughly, scrap it.
5. Being Unrealistic
Think you’re going to be in profit the first year? Well, you probably won’t.
Think you’re going to have extra money to spend any time soon? Well, you probably won’t.
Not only will you be struggling for a while, but the whole thing may not even pan out, despite your blood, sweat, tears, and money. You may be following your dream, but there's a chance doing so could end up losing your money. On the flip side, there’s also a chance that starting your business will be the best decision you have ever made in your life!
Passion can be both a good and bad thing. Let it work for you when the time is right, and shut it up if the reality of your market and target customers make it unlikely that your business will be profitable. Don’t push ahead with business plans that don’t look promising. You may be able to revise it or you may have to let go of the idea. And don't rush into a business that you haven't constructed a good plan for or are not ready to take care of.
Feel free to be enthusiastic and optimistic, but don’t let unrealistic expectations bring you down once reality hits.
Business plans are valuable tools that help you plan, analyze, identify and execute the steps and information necessary. Construct the best business plan you can by covering as many bases as possible and doing thorough research. A good business plan will save you a lot, and possibly make you even more!
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