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Business Plan Guide - 7 Mistakes To Avoid When Writing A Business Plan
By Barb Dearing
A plan guide is a great place to start when you are getting ready to write your first plan. Perhaps you have found a book about writing plans, or are following a template, but chances are, these materials will only focus on the steps necessary to create your plan and will fail to point out the critical mistakes that most new owners make. So let's ignore the step-by-step tutorial for a moment and focus on the real world mistakes you need to avoid.
1. Don't Put it Off.
Yes, writing a plan can be a monumental chore. It's easy to procrastinate while you focus on the more exciting processes of your business. Many new owners will wait until the day before their scheduled meeting with the bank -- and then frantically try to write a plan overnight. You can imagine the results.
Don't wait until you have more time. There will never be more time. You need to clear your calendar for a week and make your plan a top priority. Or if that isn't feasible, schedule a certain period of time each day to work specifically on planning. No doubt you have heard the old saying: "If you fail to plan, you are planning to fail".
2. Don't Confuse Profit With Cash Flow.
Unless you have an accounting background, you are very likely to define the success of your in terms of profits. A simple definition of Profit would be Sales minus Expenses equals Profit. But in the world, profits do not equate to cash. Your profit formula does not take into account the amount of cash you have tied up in production costs for products that have not yet sold, or the customers who still owe you money for sales that have already been made. Your can look quite "profitable" while your bank account is over-drawn.
Make sure your plan includes a table that addresses cash flow. Ideally, you should detail the monthly cash flow for the first two years of the and annually thereafter.
3. Don't Fall in Love With Your Idea.
Too many plans blabber on for pages about the "newness" and "uniqueness" of the idea. But the truth is, investors want to invest in people, not ideas. It is only the people who can execute the systems necessary to bring the idea to life.
Instead of waxing poetically about your idea, focus your energy,
and your reader's eyes, on the ways you plan to implement this great idea.
4. Don't Succumb to Fear and Dread.
If you have never written a plan, the process may loom like Mount Everest. But, like most new challenges, writing a plan isn't as hard as you have imagined it to be. You aren't writing a doctoral thesis or the next great novel. If you have invested in a plan guide, use it. You can easily find helpful resources such as books, software programs and templates. Remember, you eat an elephant one bite at a time, so start chewing.
5. Don't Over Sell.
Skip the vague and meaningless phrases such as "best ever", "highest quality" and "unsurpassed customer service". You will lose your reader's interest and respect if you engage in hyperbole that isn't supported by measurable facts. Remember that the objective of a plan is its results, which require tracking and follow up. Focus your goals on specific dates, management responsibilities, budgets, and measurable milestones. Think fewer words and more numbers.
6. Don't Engage in One-Size-Fits-All
Business plans can have many different purposes and they should be written to reflect the specific purpose at hand. You may be using your plan to start a business, or just run a better. Your purpose may be simply to sell an idea for a new to one particular partner. Your plan may be intended to secure a small loan, or it may be needed to secure millions of dollars of venture capital. Each of these purposes would require different information, presented in different ways to meet the needs of different readers. Keep a picture of your intended reader firmly in your mind and your plan will stay focused as well.
7. Take Off the Rose Colored Glasses
Optimism is a wonderful resource. Without it, a owner would find it difficult to summon the energy necessary to launch a new venture. However, this is not the time to engage in unbridled projections. If your company's growth chart is based on an "industry average" of 15% annual growth, you should certainly be prepared to prove that assumption. When in doubt, be less optimistic.
By using a good plan guide, and avoiding these common mistakes, you can prepare a plan that almost guarantees your success. Good luck!
Barb Dearing is a writer specializing in topics that relate to new business owners. She recommends a free 9-Step Business Plan Guide that can be found at: www.business-plan-guide.com
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