In a recent blog, we mentioned 6 steps to writing a business plan. At McDade Roberts we see many business plans but unfortunately many can fail. Now that you have written one (we hope), it is important you get the most out of it so read below to see why a business plan may fail and what you can do to make sure yours doesn’t.
Here are six common business plan traps to avoid:
1: A dead document
A business plan that is created for a purpose and then discarded will always become obsolete quickly. Making your business plan a living document (see step 6) is essential if you don’t want the whole process to be a failure. Only a regularly reviewed and updated plan can be the spur to look critically at your business on a recurring basis.
2: Over-optimism
Most business plans are over-optimistic, especially as regards predicted sales, often massively overestimating the size of the market. Research your market thoroughly. Too many business plans include a SWOT analysis, but concentrate on the strengths and opportunities and ignore the threats and weaknesses.
3: Ignoring the competition
Business plans commonly assume that the competition will make no competitive response or indeed, will have no new initiatives of their own. Study your competitors and try to second-guess their plans. A living document will take into account their actions.
4: New or old?
Too many business plans depend on doing something new, when what is needed is to find a better way of doing what is being done now.
5: Ignoring risk
What are the risks attached to the plan? Think through these and the costs of failure as well as the rewards of success.
6: Profit or turnover?
Remember the old adage, turnover is vanity, but profit is sanity? If expansion is planned, it should result in increased profits, not just sales. Expansion requires finance, people and other resources. Do you have adequate resources?
Remember, a good business plan is as much about the process as the final document. Creating your plan will open your eyes to the realities of your business. Keeping it updated will help you stay on the right track.
If you are struggling to meet your original business plan, why not give us a call at McDade Roberts to see if we can help.