It goes without saying that every successful company starts with the same foundation: a business plan. Researching and outlining a strategy is an important first step in building your business, and the disadvantages of not having the right business plan can threaten your success. What factors make a business plan a good business plan? What business mistakes should you avoid? Here are four pitfalls in business planning — plus ways to improve your business plan.
1. Incomplete Financial Projections
Many business plan mistakes are financial ones. Missing cash flow projections or income projections often indicate a lack of research. The good thing about this kind of mistake is that it’s easily fixed — all it takes is some homework.
First, be realistic about the costs of running your business. A plan should demonstrate that you’ve been diligent in your financial forecasts, thoroughly researching fixed and variable expenses and accounting for unexpected ones. (It’s also never too early to start thinking about insuring your business to protect all your hard work.)
Second, don’t exaggerate your prospects. If your plan reflects a conservative estimate of revenue and profits, you’ll be able to weather any storm without skipping a beat.
2. Aiming to Please Everyone
One of the most common mistakes that small businesses make is trying to appeal to everyone. It’s tempting to aim to please, but you’re not doing justice to your business when you water down your specialty.A successful business plan will address potential competitors, focusing on what your business can do differently. What does your product bring to the market that is truly unique? Focus your business plan on what you’re passionate about, and you’ll reap the benefits of staying true to yourself.
3. Not Updating Your Business Plan
Your business will change over time, and your plan should, too. A business plan is so much more than a piece of paper that helps you get a loan. It should be your reference guide for the lifetime of your business.
After auditing your business plan, updates should include:
- Current financial forecasts based on up-to-date research.
- New information you’ve learned about your customers.
- Adjustments you’ve made for new staff or structural changes.
- Any insights that you’ve gained since opening up shop.
4. Relying on Your Plan More Than Yourself
As important as forecasts are, keep in mind that they’re just that: predictions, not rules set in stone. Reality never happens exactly as we imagine, but you can still respond confidently in the face of the unexpected.
If your business doesn’t perform according to plan, don’t spend too much time down in the dumps. Focus on adapting to the moment and realize that one advantage of writing your business plan was the process itself. In asking lots of “what-if” questions, you’ve prepared yourself to meet this challenge head-on.
Remember, you’re the one who wrote your business plan in the first place, and you can always improve it. Update your research accordingly and keep forging ahead to make your business the best it can be.
You’re Not Alone
Owning and managing a business takes a lot of work. That’s why Farm Bureau is here to help. Talk to your local Farm Bureau agent about getting the right coverage for your business to make sure your livelihood is protected.