| The idea of writing a business plan seems daunting to | | | | your plan addresses all of those organizations that will |
| many. In reality, if you start with a solid framework, | | | | be competing for the same dollars you will be going |
| or outline, you will find that it goes much faster than | | | | after. |
| you thought possible. Better still, you will learn a lot | | | | Mistake #4: Outrageous financial projections. |
| about your own business as you go through the | | | | It's impossible to know if your financial projections will |
| process. This article focuses on common mistakes to | | | | prove to be accurate. Yet, it's fairly easy to tell if |
| avoid. By avoiding these common pitfalls, you will | | | | they are realistic. Understand that your financial |
| create a better business plan that helps your business | | | | projections are more of a reality check than anything |
| to succeed and one that resonates with bankers and | | | | else. Accordingly, make sure they are within reason. |
| investors. | | | | More than one wide-eyed entrepreneur has thought |
| Mistake #1: Trying to write the business plan with | | | | they had the next Google on their hands. Even if |
| just an idea. | | | | they were right, the more likely reaction to seeing a |
| Bam! You have an idea. In fact, you have a great | | | | sky-high revenue forecast would be a total loss of |
| idea. It is to your credit that you want to put your | | | | credibility. |
| thoughts to paper and create a business plan. Yet, | | | | The source of most unrealistic financial projections is |
| you will improve your idea and ultimately your | | | | the "top down" forecast. A top down forecast |
| business plan, if you let your idea incubate. In this | | | | sounds something like this: "There are $1 billion of |
| fast-forward age, some things are still better | | | | widgets purchased online every year. If we get just |
| developed over time. Think of your business plan not | | | | 2%, we'll have a $20,000,000 business." These |
| as microwaveable meal. Rather, as a stew with many | | | | forecasts rarely go on to say how the business will |
| ingredients. Each one must be added in its own time. | | | | get to 2% market share. |
| Sample the stew and see what to add next. All along | | | | Instead, take the bottom up approach. Show the |
| you had the recipe, but you must let it come | | | | number of sales that can be made by each sales |
| together over time. In the end you will know when it | | | | person (or per site visitor), and build it up. Then make |
| is ready to be served. | | | | sure your plan accounts for all of the right resources |
| Remember that it is a 'business plan', not an 'idea | | | | that will be required to generate and deliver the sales |
| plan.' Your plan needs to reflect that you have | | | | figures. The reality of your forecasts will start to |
| thought through all of the aspects of turning your | | | | come into focus much more quickly with a bottom |
| idea into a business. Yes, get to it early, but not | | | | up approach. |
| before you have thought through all the critical | | | | Mistake #5: Not having the right team in mind. |
| factors. | | | | Finally, keep in mind that new businesses are nothing |
| Mistake #2: Outsourcing the writing of your plan | | | | more than the wisdom of the people behind them. |
| without learning anything in the process. | | | | They have no current customers, contracts, or sales |
| There are plenty of services that will write your | | | | backlog. The new business is totally dependent on |
| business plan for you, for a fee. In fact, you can | | | | the team. Collectively the team should be fully |
| even buy a pre-written plan for any type of business. | | | | experienced in all aspects of the industry and |
| There is nothing wrong with getting help. Keep in | | | | markets your business will serve. Yet, when you are |
| mind that in the end, you have to execute the plan. | | | | at the business plan stage, it is unlikely that you will |
| If your plan is to serve any purpose you must truly | | | | be in a position to hire your full team. There are two |
| understand it. Reading a document that was written | | | | steps you can take early on that will provide fuel for |
| by someone else won't qualify as truly understanding | | | | your business and your business plan. |
| the plan. In a business plan, there are inputs and | | | | First, map out the key positions for which you intend |
| outputs, causes and effects, actions and outcomes. | | | | to hire. Clarify their roles and the qualifications. |
| It's important that you understand these relationships. | | | | Prioritize your list of early hires, recognizing that |
| Get the help you need, but also take the opportunity | | | | sometimes things fall into place due to timing. If |
| to learn what you didn't know before. For example, | | | | possible, identify specific individuals who are |
| let's say that you needed to go to an outside source | | | | enthusiastic about joining your company when you |
| for help with the financial projections. When they are | | | | have funding or reach a certain milestone. With their |
| complete, have your service provider walk you | | | | permission, incorporate their information into your |
| through every aspect of the financial statements so | | | | business plan. |
| that you would be able to explain them to someone | | | | Next, work to assemble a board of advisors who |
| else with confidence. | | | | have relevant experience. Advisory board members, |
| Mistake #3: Claiming you have no competition. | | | | depending on the formality of the arrangement, |
| There is big trouble ahead when a business plan | | | | often work at no cost in the early stage of the |
| includes the words, "We have no competition." To a | | | | company. Identify individuals who could provide |
| banker, investor, or experienced business person this | | | | mentoring in specific areas. Again, with their |
| translates to, "I have no idea who my competition is." | | | | permission, list these advisors in the team section of |
| It is very important for you to understand who your | | | | your business plan. |
| true competitors will be. Your true competitors are | | | | Going Forward |
| those organizations where your future customers are | | | | A business plan is a working document that will help |
| spending their money today-money they will instead | | | | you to refine your vision and execute a successful |
| be spending with you in the future. That might or | | | | plan. Adhering to the discipline required to write a |
| might not be a business just like yours. For example, | | | | solid plan will propel your business forward. Start with |
| the motorcycle shop's biggest competitor might be | | | | a solid business plan outline or business plan template. |
| the boat dealer. | | | | As it is said, nobody plans to fail, but too many fail to |
| In addition to your direct competitors, be sure that | | | | plan. Be sure you "plan" to succeed. |