The 5 Biggest Business Planning Mistakes (And How to Fix Them)

INTRODUCTION:

Are you time poor trying to make ends meet with your business? Not only are you working ridiculous hours but you feel you are missing out on valuable time with the family & then you start to question whether the whole thing's worth it.

We've all heard of the term 'business plan' but how will it make any difference? Well, a great business plan can turn your business and your life around whereas a poor business plan can be extremely dangerous.Time and time again business owners are told by their business advisors to make sure they have a business plan but the ones I see are often poorly thought through and almost irrelevant! What then are things you must avoid when deciding to formulate a solid platform for success?

Mistake #1 Objectives are far too vague

A great business plan clearly articulates what the business will look like in 3 - 5 years time including revenue, profitability, number of employees, location(s) & size and number of clients/customers.

A plan which has the following goals will always struggle to achieve them:

• To make as much profit as possible;
• To spend $x in advertising in television, radio & print;
• To beat our competitors on price through cheaper buying and aggressive discounting;
• To expand interstate & then overseas;
• To have a saleable business within 5 years.

Whilst some of these maybe ok on the surface, by not being more clear this will make it harder to actually plan to achieve such goals. Get specific! Having the above goals will only get you a 'business by default' instead of a 'business by design'. Work out profitability & then work backwards to work out what revenue levels you need. This will also let you see what your business value might be worth.

Mistake #2 No input from team or family

You may have a clear picture in your head on what you want your business to look like but have you got the most important people on board who share your dream? What affect will your plans have on your family? Will you be travelling away a lot for example and if so, does this fit in with your lifestyle plans?

Encourage input from:

• your team members (for buy-in and ideas);
• your family (for lifestyle);
• your financiers (for funding); and 
• your business advisors (for assistance to get your there).

Mistake #3 Inaccurate Cash Flow & Profit Projections

It will be very hard to realise your vision & steer your ship if you don't have some clear and realistic financial goals. Don't just do an income & expenses budget. Do:

• a cash flow forecast;or better still
• 3 way budgets (i.e. a balance sheet, profit & loss and cash flow forecast).

Accurate projections will allow you to assess whether you have the resources for your planned business growth as it is quite possible to run out of cash making a profit! If you need finance, give your financiers confidence by showing them that you have thought of almost everything when working out your cash balances.

I often see inaccurate projections in the business planning stage and it's little wonder many of these plans don't come to fruition.

Mistake #4 Business Plan is far too long winded

There are so many business planning templates out there but most of them go for 30 pages and sometimes even 70 plus pages! Now that is great if you need that much detail but make sure once you're finished you refer to the plan regularly and not just use it as a doorstop or a token document that the bank manager ticks off their list before lending you the money to achieve your goal.

Consider going to gazelles.com for your one page strategic plan (some of it is free). We have had enormous success with their approach and it is so much easier to refer to the big picture stuff on an A3 page that you can laminate and take everywhere with you if you do have a moment to look at (coffee shop or airplane).

Mistake #5 Business Plan is never updated or monitored

Refer to your plan regularly and use the goals contained within it to make sure you stay on track when you work out how you are going.

Do the following:

• Build projections into your accounting software;
• Review the projections against actuals each quarter (as a minimum);
• Update the plan as required - things can & will change;
• Have action plans (who, what, when) & discuss these at your quarterly 'board meeting';
• Buy the book Mastering The Rockefeller Habits - easy to read and simple to follow when implementing your one page strategic plan;
• Have 15 minute huddles each day with your team to get 'rythym' and momentum going.

CONCLUSION:

Sometimes business plans can be overrated but only if they aren't done properly! Some of the tips above have worked wonders for our business and I hope these can do the same for yours.