Top Ten Things to Avoid When Creating A Business Plan

There are various articles written by business gurus that teach the proper way to create a business plan. This is a shorter guide as to what to AVOID when preparing a successful plan. If you want to prepare a good one, stay clear of the following common mistakes:

Misunderstanding the purpose of a plan. The actual process of planning what goes into a business plan is actually an exercise in patience, intelligence and attitude. A plan is not prepared just for the sake of getting it all on paper - it's a test and an ever-changing list of tasks and procedures that are often adjusted /changed to better fit a goal.

Preparing the plan in one sitting. Unless you have a one-page handwritten plan (which you will revise later on, without a doubt), a plan must not be hurriedly prepared. It takes time to think of the proper strategies, especially if your entire business will rely on it. Prepare it in pieces - not chunks. Think of concepts, target markets, business offers, projections - so how could you do it in one sitting alone?

"Finishing" your plan. A finished plan is the equivalent of a business with a definite end. As businesses are perpetually changing, and most probably evolving, a business plan must always be open--ended - for future changes. This enables a business owner to make quick adjustments if and when necessary. It must always give the impression that it is "alive" and changing to reflect changes in the business.

Hiding the plan from the team. This actually doesn't make any sense. If you and your entire team are working towards a goal, then all of you help in their own little ways to accomplish the goal! So why must it be a secret to everyone else? It's like a sighted man, leading a group of 15 blind men in a jungle full of booby traps and quicksand. Instead, build team spirit by jointly discussing tactics and by using peer collaboration. Of course, you need not share the plan with strangers.

Confusing cash with profits. Profit is an accounting concept; cash is money in the bank. It's easy to have profit but not have anything left in the bank - especially if you use up your profit to pay for expenses. Not all profit is "spendable" - but cash is.

Diluting your priorities. A plan should stress only 3 or 4 priorities, not 20! Having too many priorities makes it less focused. This makes the plan too spread out and more difficult to accomplish. As in life, you must have a specialization in order to know what to fully develop, what to enhance and try to make even more excellent. A plan with 20 priorities actually does not have any.

Overvaluing the business idea. An idea has no value if there is no business that works around it. It serves as the basis for action within the organization, but it's actually the people, the hard work, the products, the services that complete a business - and not just the idea behind the business.

Putting together the details carelessly within the first 12 months. By details, we mean, financials, milestones, responsibilities and deadlines. Devote more time to carefully establishing roles, time frame, what needs to happen - because these details really matter. Focus on this to give clarity to your business plan.

Planning for the later years. How can you possibly plan cash flow for the next 3 years? One month matters, and a lot can happen - but planning growth for the next 36 months can be pointless, and a complete waste of time. It's like you're setting yourself up for disappointment. Nobody will believe a business plan too far off into the future, seeing that factors surrounding the business are so uncertain.

Making absurd forecasts. Sales projections which are difficult to reach are absurd. It's also nearly impossible to forecast profitability - it's a direct reflection that you don't have a realistic understanding of costs and expenses.

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