Business plans are a very important procedure regarding a business's growth and survival; it can be seen as a very daunting task. Business plans consist of numerous modules and sections, all providing different pieces of information that relates to the strategic planning of the business. Business plans are generally the first step new business owners take. However, often new entrepreneurs have a lack of business knowledge. Often resulting in errors being made. Here are the top 8 business plan mistakes:
1. Finishing the plan in a single session. - For an unknown reason, several entrepreneurs naturally attempt to finish a business plan in a single session. This is not the correct way to complete it. A business plan is like a clock, each individual module is an important cog. Getting the ball rolling regarding the business plan, is more important than knowing where to start. Attempt the part that provides the most immediate benefit and progress from there.
2. Being confused regarding the overall purpose of the plan. - The key purpose of a business plan is to plan, it is not just a document. The key mistake that is made by many business owners, is that they create the business plan as a foundation document for the business, and think that is its function, this is not the case, it is a key document to look back on at all times and review the business progress and to make sure they are going down the correct path.
3. Leaving the plan incomplete. - This is one of the most criminal mistakes, as an incomplete business plan is useless, an entrepreneur that makes this mistake, is open to a wide range of risks. An unfinished business plan is often rendered useless. An incomplete business plan is one that doesn't consist of all these significant modules: Your customers, products, operations, marketing strategies and sales, your management team and your competitors. An analysis regarding your industry and its trends should also be included.
4. Hiding your plan from your team. - A common mistake that managers do, is not sharing the business plan with your team. A business plan is a management tool. Use common sense about what you share with everybody on your team, keeping some of the information confidential, for obvious reasons. A business plan can perform as a team morale builder and create peer collaboration. But in order to achieve this, a manager must ensure that their team are aware of the goals and strategies of the business.
5. Don't confuse cash with profits. - Contrary to popular belief, there is a considerable difference. Cash flow is the money that flows in and out of the firm from operations, financing activities, and investing activities. Profit, also called net income, is what remains from sales revenue after all the firm's expenses are subtracted. Companies can make a profit but still have a negative cash flow and not be able to pay their bills. Not recognizing this difference is one of the biggest mistakes a small business owner can make. Misunderstanding these two monetary values could leave your business in a very insecure position.
6. Diluting your priorities. - Producing lists of priorities that are very long in number, is a critical mistake. This can often cause dilution. By condensing your priority list to below 5, will give your business plan focus and drive. A plan with 3 or 4 priorities also allows a higher understanding.
7. Over-valuing your business idea. - Over-valuing your business idea is criminal. If you do this, you will learn business failure the hard way I'm afraid. A business idea and the business that it is built on go hand in hand. Neither is more significant than the other. Writing a business plan that outlines your intent of building a reliable business that supports your idea is vital.
8. Making irrational forecasts. - For a business plan to be considered a valuable resource to the business, the forecasts must be realistic. In business, you make critical future decisions all the time; using your forecasts to make these decisions. If these forecasts are unrealistic, the wrong decision will be made, and the consequences could be catastrophic.
Colin Franklin is a keen business entrepreneuer, who holds a great interest in everything regarding planning in Business. He thinks that it is the integral procedure to business success. Colin takes great pleasure in providing fellow entrepreneurs and business owners with useful advice. Why don't you visit this great online planning tool which he wholeheartedly recommends - http://www.plananything.com
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