Business experts are a bit like dieticians; their advice keeps changing. But there is one thing that all experts consistently agree upon and that’s the importance of drafting a business plan. Despite the strong arguments in favour of creating a business plan far to many small businesses either don’t do it at all or do it badly.
To help you get ahead of the pack, we’ve pulled together our top 10 business planning mistakes and provided some pointers on how you can avoid them.
1. Putting it off.
If you wait until you have the time to write a business plan it simply is not going to happen. The result: your business continues to go from one fire fight to another without the forward momentum that a plan provides.
To avoid this make business planning a regular part of your annual calendar. Plan business planning retreats with your staff. Make deadlines. Get a coach or mentor to make you accountable to your deadlines.
2. Fear and dread.
Business planning does not need to be as hard as you might think, so don’t let fear prevent you from getting started.
The best way to avoid fear is break down the business planning process into manageable sections. Check out our series of 6 business planning videos and tackle things one video at a time. And remember, this doesn’t need to be a doctoral thesis (see mistake #10)
3. Thinking you don’t need it.
Too many businesses make the mistake of thinking a business plan is something for the bank or an investor. So they tell themselves if they don’t need money, they don’t need a plan.
In fact, a business plan is first and foremost for you and your business. It is a roadmap to help keep your business on course. Without it you risk losing touch with your business. You might be alright for now, but you will flounder when you hit competitive or other pressures.
4. Missing the why.
Too often business owners think only in terms of the features they offer and forget to ask, “why?” Why do customers need your product? Why does your business matter to you and your customers? It is these questions that drive your own personal motivation and create customer loyalty.
To avoid this mistake always start you business planning process by reviewing your mission statement. This should help you get to the heart of the “why” and will provide a strong platform for the rest of your plan.
5. Staying too focused on the near future.
Before you get mired in the detail of what to do tomorrow, next month and next quarter it’s important to take a step back and look at the bigger picture. Where exactly do you want your business to head in the next 5 years or even decade. Without clarity around your future, it is hard to plan your present.
The best way to avoid planning near-sightedness is to spend some time clarifying your vision for the business. Check out our video on writing a vision statement for some pointers.
6. Ignoring your weaknesses and threats.
None of us likes to face up to our weaknesses, but simply ignoring the weaknesses and threats that face your business is a sure fire way to end up with an unrealistic plan that will fall to pieces.
To avoid this make sure you conduct a really thorough SWOT analysis that carefully reviews your strengths, weaknesses, opportunities and threats. Make sure you are completely honest with yourself. Then refer back to your SWOT as you build your plan, constantly checking to make sure that weaknesses and threats aren’t going to trip you up.
7. Vague goals.
Measurable goals are crucial to a meaningful plan. If your goals are vague how are you ever going to know if you are on track to achieve them?
To avoid vague goals make sure each goal is specific and measurable. “Increase sales” is not specific. “Increase sales by 5%” is specific, but how long is it going to take to achieve this increase? “Increase sales by 5% in the next 12 months” is a specific and measurable goal.
8. Laundry lists of goals.
Having too many goals is a license to achieve nothing. You are much better to focus your energies on the really important goals than to disperse your efforts across a wide range of lesser goals.
To avoid laundry lists make sure you identify the three or four most important goals and focus your entire business plan around achieving these goals.
9. Pie in the sky assumptions.
Optimism is great, but it’s not helpful to make unrealistic assumptions. If your entire plan centres on an assumption that you are going to sharply increase your market share in a fiercely competitive market, you may find yourself running out of money very quickly.
To avoid an impractical plan make sure you always test your assumptions against your SWOT. Given your weaknesses and the market threats, how realistic is your assumption?
10. Writing a doctoral thesis instead of a business plan.
An effective business plan doesn’t need to be longer that one page. It’s not about the number of words; it’s about the quality of thought that goes into assessing your current situation and setting out a plan for the future.
Other Business Planning articles and resources:
Business Planning video series – video
The 8 Steps to Great Business Goals – article
What is Your Purpose – podcast