Whether or not you are seeking financing from lenders, it is essential that you create a comprehensive well thought out business plan. Writing your plan will help you think objectively about your business idea and help evolve strategies for the future. It creates a road map for your business to help you determine what resources you will need to make a profit.
This all sounds great but if you have not written a business plan before, it can seem a daunting and confusing to know where to start. To help complete your plan we have listed below some of the most common pitfalls of writing a business plan and tips on how to avoid them.
1. Create a Vision for Your Business Idea
Once you have come up with the idea for your business it is often tempting to roll up your sleeves and dive right into the details of market research and operational logistics. But before you get lost in the details it is important to have a clear vision of what you want your business to be and a set of values you want business to adhere to. This will help you establish your business priorities and therefore plan more effectively.
2. Know that a Financial Plan is not the same as a Business Plan
You cannot create a solid plan without a financial plan and forecast. But your financial plan should ultimately reflect all of the elements in your plan. If you have not completed your market research on your industry, customers and competitors before you create your financial plan, your numbers are not likely to reflect reality.
3. Don’t Forget Your Customers
Many entrepreneurs come up with a brilliant idea, thinking they know exactly what their client want but never actually ask their client if that’s true. Take time to understand your customers and build your business plan on what they need and how you will service that need.
4. Pay Attention to your Competition
Don’t assume that you will be the only business around offering your service. Research your market and find similar companies. Study these companies and learn about what works for their business and what doesn’t. Then make your business better.
5. Don’t Avoid Risk
Creating a business plan isn’t about avoiding risk; it’s about understanding and managing risk. Your business plan should anticipate possible challenges and address your strategies for meeting these challenges. Remember there is a difference between calculated risk and recklessness. Your plan should help you make that distinction.
6. Get a Third Party Review
It’s difficult to detach yourself and review your plan neutrally, so ask a htird party to review your plan. They will be able to objectively highlight any areas you might need to improve or any areas you may have missed.
7. Expect the Unexpected
It is important to leave some room in your plan for any unexpected changes. Whether this is in your budgets or in your marketing and operational plan: build in some flexibility to your overall plan.
8. Don’t Skip the Plan!
The worse mistake of all, of course, is not creating a business plan in the first place. Writing a business plan is hard work and there is no guarantee it will make your business succeed. But it is still the best way to turn your idea into reality.