Is Your Business Plan Setting You Up For Failure?

When embarking on a new business, nobody plans for failure. Then why do some business plans set people up for big challenges, or even failure, down the road?

Before you get too far with the launch of your business, it’s wise to carefully review your business plan and find any errors that could lead to failure. Let’s take a look at some of the most common business plan mistakes.

 

Procrastination

It’s not uncommon for excited entrepreneurs to jump the gun and begin setting up businesses before creating a formal plan. In fact, some people only create a business plan when forced to by investors or lenders. 

This is understandable. You’re busy, and it seems that laying out a formal business plan might be a waste of time, especially if it all seems so clear in your head. Procrastinating this task, however, is dangerous. You might miss important steps, details, and timelines. Don’t wait to find out what’s missing from your business plan by jumping into operations before you have a solid, written plan.

 

Unclear Cash Flow

The cash flow table is one of the most important parts of your business plan. We tend to think in terms of profits instead of cash: sales minus costs and expenses equal profits. But in the day-to-day operations of your business, you don’t spend your profits; you spend your cash. 

A healthy cash flow can set your business up for success right from the start. Without a plan for cash flow, however, you could run into the cash flow problems that frequently plague start-ups. Don’t fall into this trap. Use your business plan to get your cash flow started off on the right foot.

Idea Worship

People often overestimate the importance of a good idea. They fall into the trap of thinking that a great idea can carry a business through all the details and hard work. In reality, though, money, time, common sense, and grit are far more valuable to a new business than an idea. In fact, new ideas are harder to sell to investors, lenders, and customers than old ideas because there’s no evidence that it will actually work.

Use your business plan to lay out the details of your business, not to overestimate the power of an idea. It’s great to be excited about the idea on which you plan to base your business, but keep that enthusiasm in check. Without the nitty gritty details of your business plan, your idea won’t have a chance to succeed.

 

Vague Goals

If you want to plan for success, put those plans down in black and white on your business plan. That includes specific dates, budgets, cash flow details, milestones, management responsibilities, and tracking methodologies. With such clear-cut plans, it’s easy to follow up and see if you’re on track for success.

Even if your current business plan is vague, wishful, or even non-existent, it’s not too late. You can create a business plan that will set you up for success and be a reliable guide to your first weeks and months in business. For help with your business plan, or for questions about any other business issue, contact us at Altus Financial. We’re here to help.

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