Answer: The task of creating a business plan is awesome, because it requires the business owners the dig deep, research, and validate the proposed business concepts. Consider the following when commencing the process.
Not writing one – The most common mistake is not to write one at all. Because many entrepreneurs are action oriented, they want to “get on with it” rather than take the time, up front, to research the market, the competition, understand the market and the customers and validate their value proposition. Winston Churchill once said, “he who fails to plan, plans to fail.”
Not having a clear vision – The reason for creating a plan is to create a roadmap to make your vision of a business into a reality. The plan is to provide investors a clear understanding of your business venture so they can decide if they will provide you the funds you need. It is to determine the risks associated with your business venture to determine if a bank will loan you the funds you need for start-up. It is for you to guide you from point A to point B in the launch of your venture. If it is later, then using the Business Model Canvas is an alternative to the traditional full-blown business plan. (www.strategizer.com) And, to present your concept you might consider PItchDeck. (https://pitchdeck.improvepresentation.com/what-is-a-pitch-deck)
Not having a clear business model – If the basic goal of business is to generate a profit, then you have to have a model that is well thought out and can be executed to show positive results. Selling a product or service is one element of business, but have a plan that allows you to generate a profit over the long term means having a business model that performs. The business model is how you are going to get from launch to an on-going profitable enterprise.
Not doing the requisite research – Answering the question, “Will this work”? Is the key issue a business plan answers. But, it takes research to do it. If you are planning to open a BBQ restaurant on Main St. in Hyannis, what do you need to know? Are there any other BBQ restaurants already on Main St? How many restaurants are there already on Main St? How many are for sale? What is the traffic flow in and out of season? How do potential customers find out about restaurant offerings on Main Street in Hyannis? This takes legwork. Without the research, you are working in the blind.
Ignoring realities – You have a great idea. YOU know it will work. But, is there a need that the business concept fulfills? Will customers pay for what you have created? Do the realities of the market support your business concept? Is there room for one more landscaper in the Cape Cod market? Is there a need for a kosher deli restaurant on Cape Cod? Is there the need for one more jewelry shop on the south shore? What are your differentiators that will generate uniqueness and therefore attract buyers?
Not creating financials – When you create your business plan, have you created a cash flow statement? Do you know where funds will come from and where they will go? Projected income statement? And proforma balance sheet? These are the metrics that will determine whether you are successful or not. In creating the statements, have you tested the reality of the assumptions?
If not, make a high/low/probable approach, so you look at it from all angles. There is a threat of being too optimistic in your projections.
Not using it once completed – The purpose of a plan is to guide the launch and growth then become the foundation for metrics. Too many plans are finished, then put on the shelf. Make it a living document that keeps you grounded and focused on being a useful reference document.
All plans should not be finished – One of the advantages of the Business Model Canvas approach is that it encourages “validation” at each step of the planning process. The planning process will answer whether the business can succeed. If validation cannot be achieved, then starting over before launching is a lot less expensive than launching to find there is no market, no customers, no sales, no business. Discovering there is no market while planning the business, you can pivot to take another approach. Once you have launched, it is far more difficult.
As an entrepreneur, you can have all the passion and drive, but if you don’t have a roadmap that is a functioning guide, you will wander from point-to-point trying to figure out how to make your business work. It is far easier and cost far less in human and financial resources to test your ideas and concepts in the planning of your business.