Sunday, May 5, 2013

The Top 10 Business Plan Mistakes

It is almost seven years since I posted Top 10 Business Plan Mistakes on this site. Looking back and read the post again today, I think it holds great list. However, I could not resist making a few changes. So here is my revised version for 2012, which include what I wrote then still applies.

    Incomprehension objectives: planning is important, not just documents. -Relationships with planning your business because planning becomes management. Planning is the process of setting goals and establish specific measures of progress, then tracking your progress and in accordance with the correction only. The plan itself is the first step, it was tested and frequently changing. Do not even print them unless you are really. Leave it to the digital network instead.
    Make it a huge boost, take it to pieces and sizes. The plan is a set of connected modules, like blocks. Start somewhere and go. Are the parts that interest you the most, or the parts that benefit most directly. That's probably close, concept, target market, business offers, projections, Mantra, vision, whatever. . . Just go.
    Finishing your plan. If your plan is complete, your business is done. That version is a picture of what the plan after. It should always be life changing to reflect changed assumptions.
    You keep your plan from your team. A management tool. Use common sense about what you share all of your team, keeping some information secret, such as individual salaries,. But do not share goals and dimensions, using the plan to build team spirit and peer collaboration. That does not mean division plans to outsiders, unless you have to, like when you're looking for capital.
    Confusing cash with income. There is a big difference between the two. Waiting for customers to pay can cripple your financial situation without affecting your profits. You load money supply absorbent without changing income. Revenues are accounting concepts, cash in the bank. You do not pay your bill with you.
    Diluting your priorities. A plan that requires three or four priorities is a plan with focus and power. One can understand the three or four main points. A plan that lists 20 priorities are not really there.
    Overvaluing business idea. What gives the idea that the value is not the idea itself but the business that built it. It takes employees demonstrate every morning, answering phone calls, the product is being developed, and send commands, services are rendered, and the customer pays their bill to create a business idea. Either write a business plan that shows you build your business around that idea, or forget it. An idea alone does not make good business.
    Fudging the details in the first 12 months. By details, I mean your finances, milestones, responsibilities and deadlines. Cash flow is the most important, but you also need a lot of detail when it comes to assign tasks to people, setting dates, and determine what should happen and what was supposed to happen. These details are very important. The business plan is wasted without them.
    Sweating the details for later years. It is about planning, not accounting. As important as the details of the monthly at the beginning, they were a waste of time then. How can you project monthly cash flow for three years from now when your sales estimate is uncertain? Sure, you can plan in five, 10 or even 20-year horizon of the major conceptual text, but you can not plan in detail monthly through the first year. No one expected, and no one will believe.
    Make judgments ridiculous. Believing there is absurdly high "hockey stick" sales projections. And approaching the generally high profitability usually means you do not have a realistic understanding of the costs.