Creating a business plan before diving into your new business head first will give you a much better chance of success. Here are some of the most common mistakes entrepreneurs make.
- Not writing a business plan
Not bothering to write a business plan is the most common mistake. Entrepreneurs tend to get too excited about their business idea and miss this important step in start-up. Maybe you are familiar with the saying, “He who fails to plan plans to fail.” Failure is the fate of almost every business someone starts without a business plan. You don’t need a full-scale formal business plan, but it is important that you have one.
- Not being clear about the purpose of your business plan
A business plan is your solution to the problem being how you are going to turn your business into a reality. Ask yourself why you are preparing a business plan. Is it to persuade a potential lender for a loan? To attract investors or to figure out if your idea could be a viable business? Or is your plan a blueprint for your start-up? The purpose of your plan will affect everything from the amount of research you do to what the finished plan will look like.
- Not doing enough research
Your business plan is only going to be as good as the research you put into it. You have to answer questions like; what are the trends in the industry? How will you counter what your competitors are doing? The more complete the answer is, the better prepared you will be. Every section of your business plan will involve research, which in most cases can be found online.
- Ignoring market realities
You can have the best product or service in the world but it’s not going to sell if there is no market for it. It is very important to market test your product or service. If you have a product, try selling at local venues or give out free samples to gather feedback. If you have a service, surveys and focus groups are effective ways you research your target market. Also examine what your competition is doing and explain how you are going to counter to win market share.
5. Not doing a thorough preparation of financials
There are two common mistakes people make when writing the financial section of their business plan. The first is not being realistic about expenses, people often underestimate costs. The second is being overly optimistic about your business prospects. Never let your optimism lead you to create an overly rosy cash flow. Meticulous research will prevent this mistake.
Perseverance and determination are great traits for entrepreneurs to possess, until those traits keep you from accomplishing what you should. That may be the worst business plan mistake of all.