Change can come to you quickly during a crisis. Good business planning is essential to your business’s survival and success. Even when you aren’t in a situation, mistakes can be costly to your business.
What are the biggest mistakes in writing a business planning for your company?
Some mistakes are timeless. Some are classics, while others reflect the increasing need for planning and management tools. These are common pitfalls to avoid. However, it can be a powerful tool to make quick decisions, adjust quickly, and optimize your management if you plan well.
What are the biggest mistakes in a business planning? Here is my updated list for 2021.
1. Not planning
Many businesses only make business plans when they are forced to. There is no plan unless investors or banks want it.
Do not wait to create your plan until you feel you have enough time. I can’t plan. Business people often say that they are too busy to plan. You need to plan more if you’re alive. You should consider installing sprinkler systems or firebreaks if you’re constantly putting out fires. If you pay too much attention only to individual trees, you can endanger the entire forest.
2. Using a single static plan
As we face the 2020 and 2021 crises, it is more important than ever to stop viewing the business plan simply as a plan. This conceptual error can prevent you from reaping the immense benefits of planning as an ongoing process subject to regular review and revision.
Things can change in an instant. Assumptions are swept away by the wind. You track the connections between tasks, spending, goals, changing beliefs, markets, and business planning.
A business plan should never be finished. Your company is finished when your project is complete. So keep your company’s strategy fresh and lean.
Cash is the focus
People think about profits and not cash. Instead, you think about the cost of making the product, the price you can sell it for, and the profit per unit when you envision a new business.
Our training teaches us to see business as sales, minus expenses. We don’t spend profits on businesses. We spend money.
Cash flow is crucial. Make sure you only have one table in your business plan: the cash flow table. To help you get started, here’s a cash flow template.
3. Validation of an idea without skipping
Do not underestimate the importance of your idea. To start a business, you don’t necessarily need a brilliant idea. Instead, you need to have the right amount of money, time, perseverance, and common sense.
Only a few businesses have been able to thrive on only new ideas. It is more challenging to implement a new idea than an existing one because people aren’t familiar with it and often uncertain if it will succeed.
Investors don’t buy new ideas from plans. Plans are a summary of business prospects and accomplishments. Investors invest in people and their businesses, not in thoughts. Investors invest in companies that have reached milestones and are gaining traction and validation, not just ideas.
Although the plan is necessary, it’s only one way to present information. Make sure that you are ready to impress potential investors with your leadership and knowledge skills. Do not expect your business idea or the business plan that you present to do all the work.
It is our idea validation checklist. It can help you determine whether your idea will be viable before spending too much time or money.
4. The planning process can be overwhelming
It’s not as difficult as you might think to create a business plan. It doesn’t take a Ph.D. thesis or a novel to start a business plan. As we mentioned earlier, the most straightforward Lean Plan is just a few pages full of bullet-point lists and tables.
The Small Business Development Centers (SBDCs) have many good books and advisors. There is also a SCORE mentoring program and business schools. Do not worry about the cosmetics. Concentrate on the content. It is not what you write but what you plan that matters.
5. Spongy, vague goals
You can leave out all the meaningless and vague business phrases (“being the best”).
Remember that the goal of any plan is to produce results. Therefore, tracking and follow up on your results is essential. Specific dates, management responsibilities, and budgets are crucial. You can then follow up. It doesn’t matter how well-thought-out or beautifully presented; it is useless unless it delivers results. This article will show you how milestones can make your business plan tangible and actionable.
6. Assuming that one size fits all
Every business plan is not the same. Likewise, not every project needs to be the same. It will help if you tailor your program to the business purpose of your plan to achieve success.
There are many types of business plans. Sometimes they are just documents that explain the new business. You can use them to create flexible Lean Plans, financial plans, marketing, and personnel plans, as well as detailed action plans. These plans can be used to create a business or improve the operation of a business.
Make sure you create the plan that is most relevant to your business goals. Don’t let the planning process take over.
7. Priorities that are not clear
Strategy equals focus. Splitting your priorities will cause you to lose your focus, which can lead to ineffective progress.
The focus should be on a prioritized list of three to five items. A priority list of 20 things is not strategic and seldom, if ever, effective. The less critical each item is, the more items are added to the priority list.
8. Shaped growth projections
Slowly, sales grow but then explode with rapid growth whenever “something” happens. If that’s all you project, it’s a problem.
To be able to defend your projections, it is best to have conservative predictions. If in doubt, be less optimistic. It may be a good idea to have several forecasts — a conservative one, one that is more optimistic, and one that accurately reflects your actual performance.
Here’s how to create your sales forecast if you are unsure where to begin.
9. Paying no attention
It was proven again in 2020: planning is best when it’s a process. A lean plan is essential to navigating volatile environments. Regular reviews and revisions are required. It is not about the document or the business planning. That is not the goal. It’s about planning that functions like driving on a GPS.
The long-term strategy is established, and the goals are set. The significant milestones and metrics are the recommended route. You also have regular progress reviews that are equivalent to real-time traffic information and weather information.
Steering involves frequent course corrections. Planning is the best way to do that. However, your planning will be useless if you ignore the external factors and adjust accordingly.
10. Stay true to your plan
Contrary to popular belief, there is no virtue to sticking to a plan just because you like it. Your initial goal may be incomplete, missing steps, or ineffective in many cases.
A plan does not mean that you have to limit your options or compromise your flexibility. A project is a tool that allows you to see the connections and dependencies. It’s all about being able quickly to make the right changes. Flexibility is key.
Disclaimer. The opinions and views expressed in this article are the authors Judge Napolitano.