Business Plan Mistake #11 Failure To Communicate
I know when I started this series two weeks ago, I promised the Ten Mistakes Small Business Owners Make. But if you jumped to the original article, you know there are really 11 items on my list. This final element is probably the most crucial for your success.
Business Plan Mistake # 11 Failure to Communicate
While not directly a part of your document, poor communication can have a detrimental affect on your business. As you write your plan, involve anyone who could be affected by the plan.
Seek advice from people you respect. Talk to employees, family members, business partners, and advisors, such as your accountant and lawyer. Ask their opinions and communicate your goals. It is easier to steer a boat if everyone is rowing in the same direction.
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If you have enjoyed this series of posts on business planning and would like to explore the topic in more detail consider taking me up on one or two of the following FREE offers.
- Join me for a FREE overview of business planning on March 10 at 8:30 at the offices of Trustpointe – 6666 E. 75th Street, Suite 150, Indianapolis, IN 46250. In this lively ninety minute workshop, participants will learn the elements of a good business plan, as well as tips and strategies on how to get started, and make planning an integral part of your business operation. There is no fee to attend, but reservations are required.
- And as an added bonus when you register, you are enrolled in the free eCourse: How to Write a Business Plan in 10 Weeks
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Business Plan Mistake # 10 Inadequate Consideration of Pitfalls
Stuff happens! Things go wrong. When the worst happens, will you be prepared? Too often small business owners avoid thinking about what could go wrong because they believe negative thinking will affect their performance.
This avoidance is dangerous because without an adequate assessment of risks you will not prepared if something should occur. So today’s mistake is not an afterthought, but an integral part of your planning process.
Business Plan Mistake # 10 Inadequate Consideration of Pitfalls
Create a list of the pitfalls, regulatory issues, competitive challenges, and changing marketplace conditions that could adversely affect your business. Once you identify the challenges, develop action plans, safety measures, and insurance policies to protect the lender, the investor, and yourself.
In addition to external events, consider internal events like the loss of a key employee, major client, or your computer system.
Also consider the impact of acts of nature. As I am writing this post I am working from home. There is at least 6 inches of snow on the ground, and more falling. ( I work ahead several weeks sometimes) When I left the office last night, I backed up all active projects onto an external drive. We use multiple online programs like addresstwo.com, yousendit.com, gmail and google docs to share information so my entire team has access to their files and contact lists. It is not as productive as being together in the office, but it is close.
Your contingency planning should include how you will operate in bad weather, or after more serious interruptions.
Business Plan Mistake # 9 Unsupported Financial Projections
As a rule, we entrepreneurs are optimists. We start businesses not because we have a high tolerance for risk, but because we believe in our idea, product, or service. We also believe in our ability to make the venture successful. This optimism, however, is often not supported by the facts and can lead us to make our next mistake.
Business Plan Mistake #9 Unsupported Financial Projections
Unrealistic financial projects with a hockey-stick-shaped growth curve, can set up a business for failure when owners spend too much too soon without enough cash reserves to help the business through the startup phase.
As you develop financial projections, consider two scenarios: a best case and a worst case. Can you handle the volume and capacity demands of the best-case scenario? Is the idea still viable in a worst-case scenario?
Episode 22 – But it is My Business
I am interrupting my series on small business planning, to include an interview with my friend, Laina Moloski dropped by the other day to talk about all the new changes at C & S Consulting which include her new books, and new web site. 
In this first podcast we focus on her new book: But it is My Business in which she shares tips and realistic ideas for small business owners.
From ideas on how to terminate employees to tips on sales and planning, Laina approaches the process of owning a business with humor and serious advice.
The book will be launch on March 30, but it is available now for preorder at http://candsconsulting.biz/
Business Plan Mistake # 8 Activities Not Tied to Goals
Many successful small business owners have more than a slight case of ADD. It is what allows us to juggle all the balls our business requires. Sometimes however, it is tough to keep one eye on the most important balls, because we are attracted to the small shiny objects. Allowing ourselves to get distracted too often leads to today’s mistake.
Business Plan Mistake # 8 Activities Not Tied to Goals
Your goals, once established, form the basis of other decisions. If your goal is to double sales in three years, your plan must include an explanation of the resources required to support the additional volume and the marketing activities needed to generate the additional sales.
If your goal is the destination, your business plan is the roadmap. Which route will you take? How much fuel will you need? How many hours will it take to arrive? What landmarks will tell you whether you are heading in the right direction? Avoid cluttering your document with interesting side notes and activities that do not move you toward your goals.
Business Plan Mistake # 7 No Meaningful Goals or Milestones
A business plan is more than just a financial spread sheet which tells you where you will end up, must include the milestones which help you all along the way see you are headed in the right direction.
Business Plan Mistake #7 No Meaningful Goals or Milestones
A good business plan outlines your goals. Take a good look at your company’s potential for growth. Your goals should be challenging but attainable. Goals also should be specific and measurable.
These quantifiable targets give you something to work toward and measure your progress against. Finally, goals need to be time based. Do you expect to double your sales in one year or five?
As you develop your goals, don’t include vague statements without measurement. If you are going to grow, tell us how much you will grow. Avoid the meaningless babble or business phrases (such as “being the best”), because they are hype. Outline what you will achieve and how you will measure your progress. A valuable plan is a road map to results with mile markers along the way.
The mile markers are measurable goals and deadlines. This leads you to create a timeline for your action plans, definition of management responsibilities, and framework for your budget.
Business Plan Mistake # 5 – Limited Market Research
Too often inventors fall in love with their idea. Just because it can be built, does not mean it should be. Today’s Business Plan Mistake focuses on asking the most important question of all. Does anyone really want your product?
Business Plan Mistake # 4 Limited Market Research
Too often, innovative entrepreneurs become enamored with their technology, product, or idea and fail to look at the larger community. How many individuals or businesses have a need for your product or service? And, more important, how many are likely to buy?
If potential customers are not uncomfortable with their current situation or method of solving a particular problem, they may be unwilling to spend money on your product. Even if your product provides a better solution, customers may choose not to change. History is full of well-designed, extremely innovative products that were commercially unsuccessful because consumers did not believe they needed them.
Research will help you determine a preliminary level of interest in your product and your customer’s willingness to change. A good starting point for your research is data from the U.S. Census Bureau and information from your local chamber of commerce or commerce department. These broad studies can give you a feel for the overall size of a community.
Surveys, focus groups, and informal conversations with potential customers, even on a limited scope, will help you evaluate the market acceptance of your product. Remember, just because they “should” like it, doesn’t mean they will. Consumers are not always rational.
Business Plan Mistake # 4
Today we look outside your business to your customer to find our next mistake.
Business Plan Mistake #4 Poorly Defined Customer.
Everyone is not your customer! Too often small-business owners, afraid to walk away from even one potential customer, try to define their market so broadly they include everyone. The danger? Without a focus, you end up spreading yourself so thin you do not effectively reach any particular customer.
The chiropractor who defines his target as anyone with a spine may think he is indicating he has unlimited potential. In reality, he is showing a lack of understanding of the buying characteristics, beliefs, and biases of consumers in his market. There are people who do not believe chiropractic treatment is “real medicine.” It is often expensive to convert nonbelievers. Selecting a narrower market would allow him to concentrate his marketing efforts on those customers most likely to buy.
Once you truly embrace the idea of focus as the key to a successful business, you are ready to begin developing the rest of your plan. With a clear definition of your customer, it is easier to answer the questions that follow.
Business Plan Mistake # 3 Too Much Detail or the Wrong Type of Detail
As we continue to explore the mistakes business owners make in their plan, less # 3 is particularly common among engineers and technical folks.
Business Plan Mistake # 3 – Too Much Detail or the Wrong Type of Detail
There is a story about an impatient young man who went to visit an old Bible scholar. He demanded the old man tell him everything he needed to know about the Bible while standing on one foot. The old man smiled, stood on one foot, and said, “Do unto others as you would have them do unto you! All the rest is commentary.”
Why do I include this story in a book about business planning? It is not because I think business owners require divine intervention (although maybe they do sometimes). I include the story because it contains a wonderful lesson for business owners.
Regardless of what you believe about the origin of the Bible, most people agree it is a complex work with multiple themes and messages contained in its pages. And yet, in a few words, the old man summarized the content, presenting it in a form many people would agree captures the essence of the document.
The lesson is simple. As you write your business plan, imagine you are writing for an impatient young man and try to meet his challenge. Boil down the description of your business to a simple message, deliverable while standing on one foot.
In a recent blog post, Ben McConnell gives a great example of how when we try to impress our audience, we often complicate our messages when the simple will work much better. He gives two examples of a company mission statement. The first, written to impress:
Understand how to create better innovation opportunities for our products by listening closely to our customers’ needs through a world-class community solution that deepens our customer relationships and helps customers share and collaborate together
The second expresses the same idea, in a way everyone can understand.
Innovate using customer feedback.
Which makes more sense to you?
Business Plan Mistake #1 No Plan
About once a month I teach a short workshop on the 10 mistakes business owners make when it comes to business planning. Since only a handful of people can attend at any given time, I thought it would be fun to take a closer look at the mistakes, one day at a time.
Today we begin with Mistake #1 – No Plan
Many business owners put off writing a business plan until they have no choice because their banker, investor, or potential landlord requires it. This is a huge mistake! It is easy to put off writing your plan for “someday when you have the time.” But you will never have enough time unless you make the time. The busier you are, the more you need a plan to guide and simplify your decision-making process and automate day-to-day operations. A well-thought-out plan will help you do just that.
Writing a plan does not have to be overwhelming or incredibly time consuming. You can get started with a simple outline and refine it along the way.
To begin, find a three-ring binder. No excuses that you don’t have time to go to the office supply store! Everyone has at least one binder lying around somewhere! Next, add to a stack of loose-leaf or copier paper with the holes already punched. Finally, get a set of tabs or dividers so you can label each section of the plan. The titles of each section should be:
- Executive Summary
- History and Position to Date
- Market Research
- Business Strategy
- Operations
- Financial Performance
- Appendix
Now start collecting all the scraps of paper, notes and ideas you have stored somewhere, and start organizing your information. Before long you will be well on your way to a productive plan
