Business planning can be a lengthy process taking much effort whereas a business plan is produced for some specific purpose. Your plan should serve as a means of communicating your major idea from the perspective of achieving some specific goal such as securing funding, etc. Thus, your plan needs tailoring with your audience in mind, so knowing their requirements well will help you build a great plan.
Whatever your specific purpose is, there are the following mistakes to avoid:
- Unrealistic financial projections
Your plan readers are likely to focus on figures, especially on your income statement, loss and profit. Projecting these figures does not mean you should not prepare these carefully. The numbers must be credible, consistent and defensible. Use proxies to help yourself make those consistent with the rest of your plan’s story. An mind that these figures indicate your business’s ability to raise free cash flows suggesting the business can run profitably while servicing its debts satisfactorily at the same time.
- No viable opportunity
Besides just describing an opportunity, your business plan should also describe an opportunity in detail so that it is clearly seen how this opportunity can be profitably exploited and demonstrate your ability to deliver all that is required. While writing a plan, think about including such information as what your issues and pain points are, what your proposed solution is, what benefits this solution has, why these benefits are strong, who is going to benefit from them the most, etc.
- Unclear route to market
Without evidence that you can effectively access your target market, all the opportunities are only prospective. So rather than fully concentrating on your business idea, think also of the ways to reach the public. Sure, the Internet makes it easier to get exposure even if your audience is geographically dispersed, but there are challenges, too. To maintain efficient business awareness online and make your site stand out, you should closely examine your target audience in the first place.
- Exaggerated revenue estimation
The realistic description of your opportunity’s size and value is just as important. You will very likely communicate it in very positive terms and that is where the danger awaits if you exaggerate your business opportunity. To guard yourself against it, place proper rigor around your process of deriving credible revenue estimation by use of proxies and get advantage of being aware of your business’s key revenue growth drivers.
- Neglecting cash flow management
A subtle thing differentiating a good businessman is his ability to tell cash from profits and accept that insolvency is the biggest threat to their business. Therefore, a properly structured business plan always reflects the real state of things including likely losses during the first time of trading and financing provisions like overdraft limits, etc. Also, besides fixed cost, mind that you leave some room for unexpected costs by including a contingency figure.
- Vague objective
While your plan gives an in-depth description of the concept, the plan’s purpose should be addressed, too. If you aim to secure investment, take effort to provide investors with information on potential risk and return for investment in your business. Namely, they would seek answers like why it is better to invest in your undertaking, when they should expect to recoup the investment and get return on it, etc. When the primary objective is stated, the key requirements of your reader will be met.
- Lack of real demand evidence
Another aspect you should look at when business planning is justifying your demand levels or sales forecast for your product or service. However unique your concept might be, if your market is identified widely enough, you may use figures from some alternative offerings to judge about your likely demand level. The aim of such sales forecasting is coming up with revenue figures which can be taken as credible in a wider context.
- Planning inconsistencies
Beware of inconsistencies in your plan if you want all the parts tell a cohesive story. The inconsistencies are most likely to occur when there are a number of authors to the plan. Similarly, make sure the plan’s presenter is well familiar with the plan content and is consistent and to the script while retelling it. Make sure numbers don’t contradict each other in the broader content.
- Being down the competition
No matter how original your proposition is, there will be some other companies competing with you in most cases. If you cannot identify the competition, most likely you have not been very diligent doing it. Again, it is just as important to consider your business entry threat. It is worth to think about the prospective competitive landscape in several years, too.
You want your plan to right already the first time because there may be none second. Make sure no grammatical or spelling mistakes are omitted. If you have the fixed date of presentation, set proper time for plan writing not to mess up the final stages.
Avoid the above mistakes, follow the given advice - and the chances your plan objectives are going to be met will increase greatly.