Mistakes that new business owners make with their business plan
Business in Africa has evolved over the years with more entrepreneurs deploying modern techniques and tools in creating a competitive advantage over their direct and indirect competitors. The business world is not a place for those who are not ready to learn fast, as the danger of liquidation may result from likely errors and mistakes by business owners who are not too familiar with the basics of a business plan.
Any mistakes made either consciously or unconsciously will impact your business negatively in the long run. Securing a loan facility for example, to start your new business will be directly related to the strength of your business plan. The number of errors in the business plan will lessen or increase your chances of securing that financial assistance.
Every business plan must contain all possible risks you are likely to encounter when it becomes fully operational. Unfortunately, some new business owners make the mistake of no risk disclosure, as they feel it may scare away possible investors who may want to invest the much needed funds. Forgetting to address the risks is a huge mistake. There is no business that operates without possible risks. A good business will enhance credibility, while also increasing the confidence level of potential investors planning to do business with the company. It is imperative to note that an honest assessment of possible or potential business risk will also build investors confidence on a new business and its financial projection. Risk analysis is so critical in putting up a professional business plan for small business, that any attempt to skip this vital aspect of a business plan can spell doom to a new business owner.
Due to the haste to push the business into light, most new business owners do not carry enough research on the niche market they are planning to go into. A casual investor going through such business plan can easily discover the mistakes, as the content of the plan is so shallow. A business plan is suppose to be the eyes of the business and anyone who scans through it will at a glance understand everything about the business. No need to rush into getting the business plan into the hands of would be investors when you have not done your home work.
Dig deep and uncover areas yet untouched in the field you about to explore. There are always dimensions yet uncovered which may at the long run create the needed profit margin that will bring in stability to your business. The internet has made research a lot simpler with all the necessary tools now available at your finger tips. You can even outsource the research angle to a consultant or researcher to lessen the burden and make the business plan more standard and presentable. The more facts and figures inserted, the more convincing it becomes. Writing a business plan about setting up a fish farm in Nigeria is easy on the surface, but yours must be distinctive and carry to air of superiority and this comes with sufficient research carried out.
A business plan is not just a blue print of a business, but a guide on how the business should operate when fully functional. One basic mistake most new owners make is to exaggerate financial projections and make funny assumptions all in a bid to make it colorful. Such business plans end up not practically implementable. A business plan should have a realistic financial projection highlighting possible income streams and expenditures over a year period. These projections must contain real figures that are achievable in the real world.
Every professional business plan should contain a practical strategy for its implementation. When you are able to have an identity (brand), which is distinctive from others and the market is wel1l defined and not muddled up , it becomes easy to actually implement. Linking all the various basic items in the business plan in a simple structure makes it easy for implementation. When a professional business plan is too complex rather than flexible, it not only creates room for non implementation. If you set a wild goal in your business plan then you need a very technical action plan that gets you there. Wild, unrealistic financial projections without a reasonable action plan are a waste of time. If you can’t produce a specific, and logical, action plan then you’ve set an impracticable business plan for yourself.
Going through some business plans can be a hell of a time due to its lengthy nature. A standard business plan should not be lengthy or boring. It should not only contain the basic items, but must be interesting to read. Remember, any potential investor or loan facility agent would want to go through it and ask one or two questions. If the business plan is too lengthy, the desire to carefully read all items will be abortive. The executive summary for example should cover around two to three pages at most, while ten to twenty pages of the business plan should focus on the key element of your business plan.
Lack of depth in a business plan is a common mistake most new business owners make. Each item under the business plan must be expanded for clarity of purpose. The depth of a business plan should not reveal all the secrets of the business, but should be detail enough to convince anyone going through it the potential in the business. Who are your customers? What are they interested in buying? What will make them buy from you?
You must be able to identify your business opportunity by pitching your products, service and plans to potential clients via your business plan. If you make the mistake of not properly identifying your opportunities, it’s the start of failure.
It’s a common sight to come across some business plans that are incomplete. For example, your possible customers, products, services, annual balance sheet and marketing/sales should be inserted by all means. Skipping any of these vital parts may send a wrong signal to anyone about your lack of seriousness. Forgetting to insert your cash flow which tells a summary about how revenues will be coming into the business and how it will be going out is unpardonable in the business world.
It is absolutely not okay to see grammatical, spelling and table errors in a business plan. Unfortunately, new business owners do make these unpardonable mistakes which can prove very costly in the scheme of things. It is important that one proofread his/her business plan before showing it to a potential investor. You can equally give the business plan to a second person for preview and corrections before eventually sending it in for printing.