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Mistakes To Avoid In Business Plan
Depending on the purpose, a plan may be long term and elaborated or short term and precise. While developing a business plan it is imperative to consider the business condition, team responsible for executing and monitoring it, source of funding or resources, etc.
In most cases the team responsible for developing a business plan fails to consider all factors. Let us have a quick look on commonly committed mistakes that should be avoided in business plan.
Mistakes To Avoid In Business Plan
Numbers and figures are usually essential elements of a business plan. Such plans set targets in terms of figures and set certain time limit for attaining them. Setting an absurd goal or projection is one of the big mistakes in a business plan.
As for example, you may project future financial growth on basis of P/L Statement (profit-loss statement) or balance sheet. However, it is necessary to be rational and honest in this regard. The figures of growth you project should be consistent, defensible and credible.
Depending on purpose of plan it may be essential to have break-even projection and forecast about cash flow. There should be adequate back up data to support such projection for convincing stakeholders.
Absence of Defined Objectives
A business plan lacking well defined objectives fails to draw attention among stakeholders. Such plans also create confusion among teams who are responsible for executing it.
In many cases it has found that the focus of business plan is solely the product, service or financial growth but misses out to project the big picture.
Objectives of a business plan may be something like – “Break-even by end of second year”, “Cut traveling cost by 25%”, “Attending customer complaint within 24 hours”. Such clear objectives set the underlying purpose of a business plan.
Another common mistake to avoid in a business plan is to ignore competition. No matter how unique your product or business is; there are bound to be competition in form of similar or substitute products. You need to identify these products or services. This can be done by broadening scope of market. Accordingly the plan needs to draw provisions to outwit the competitors. Business plans that ignore competition are likely to fail.
Too many Perspectives
This mistake is common where the plan is devised by a several experts. Such plans usually get complicated and problems like role defining, target setting gets complicated.
Considering too many perspectives in a business plan may result in loss of focus. While there may be certain levels of complications in a plan, care must be taken to keep them within a manageable range.
Try to avoid a business plan that is too generalized. Don’t make it too big or incomplete. Keep it simple, realistic and attainable. A business plan should have room for accommodating feed backs. The language must be free from jargons.
Figures and projections should be backed by adequate research that can establish them. The plan should acknowledge all aspects of the business like customers, products, services, suppliers, resources, management and competition. A business plan that fails to incorporate these essential elements is prone to failure.
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