Drafting a Business Plan – Top Five Mistakes To Avoid!
Imagine, if you put out fire in the forest without building firebreaks or sprinkler systems, there are many chances that the fire would spread in entire forest.
Similarly if you don’t establish boundaries of operations for a business, it’s easy to lose focus and waste time on unnecessary work and the business finally loses track and fails.
Business plan is a simple and professional looking piece of paper which defines boundaries of a business and helps it move towards success. It also introduces your business and highlights its potential to investors as well as lenders.
Business Plan contains all the necessary details of a Wholesale business i.e. what is the current state of the business? What are the achievable goals? What are the plans of action to achieve these goals? What is the time limit to attain the goals? A formal business plan has the following four sections:
1. Description of business
2. Marketing Plan
3. Financial Plan
4. Production Plan
5. Organizational Plan
Many entrepreneurs are unable to realize the importance of business planning and make several mistakes while drafting it.
I hope pointing out the following six mistakes would help them to write successful business plans.
Delay In Writing!
I have heard people saying, ‘I am too busy and can’t get time for writing such a plan.’ ‘I don’t want investors and creditors in my business, so why should I waste time on plan writing?’
Such entrepreneurs must understand, the busier they are, the more is the need to plan their business functions. Moreover, business plans serve the main purpose of getting things done effectively on time. Obtaining finance is its secondary purpose.
Entrepreneurs must spend time in identifying all the key areas of a business and then present a plan for them in detail.
A business plan remains incomplete without details of product and services, description of target market, marketing and sales strategies, competitive strategies, management rules, clear identification of goals, industry trends and projections for cash flow, income statement and balance sheets for the next three years.
Many entrepreneurs show unrealistic business potential in their plans. These entrepreneurs should know that business started with £20,000 can never generate £2 million in just one year.
Such overly exaggerated estimates clearly reflect a non-serious attitude towards understanding business venture. Entrepreneurs, if are not good enough to play with the numbers, must hire some accountant to handle financial projections included in the plan.
Making Wrong Claims!
Entrepreneurs often create a hype by using phrases like, ‘we have no competitor’, ‘we provide unique or limited opportunity’, ‘we can have one billion customers in one year’, ‘win all time high returns with limited capital’ or ‘ we have a risk-free business’.
Entrepreneurs must know that a wrong claim which cannot be fulfilled deteriorates the credibility, quality and effectiveness of a plan. Thinking realistically on every single thing you enter in your plan is the key to success.
Poor Writing & Presentation!
Many entrepreneurs spend time and effort in increasing the information quality of a plan but they leave punctuation, grammar and style errors in the final draft. Avoid writing a sloppy tone and adopt a professional tone.
Moreover, missing page numbers, charts without labels, missing table of content and no headings lead to poor presentation of plans which completely destroys its first impression on the reader.