All businesses should begin with a plan. Unfortunately, many entrepreneurs fail to consider all possible aspects of running their business. A business plan that isn't well thought out is almost worse than no plan at all. If you plan to seek investors or business loans for your limited liability company or corporation, a business plan is a necessity. Here are some of the most common mistakes entrepreneurs make when drafting their business plan.
Forgetting cash flow
Many entrepreneurs are quick to consider the potential profits of their startup without considering cash flow. While business expenses, marketing, and profits are important, don't overlook how important cash flow is to running your business. How will your business operate while it waits for those profits to come in? How will you pay vendors before the product sells? These are just a couple of the questions you need to ask yourself.
Putting off making a plan
Many business owners avoid writing a business plan until it's absolutely required. You don't need a business plan to form an LLC or incorporate, but banks or investors will probably want a business plan before giving you money. Don't wait until the last minute to create a plan or it won't be strong enough to help you plan for the future.
Writing an incomplete plan
Does your plan cover every aspect of your business? At the very least, a strong business plan will cover products/services, customers, marketing, operations, management, and competition. Address each area of your business, the industry as a whole, and the market so you can plan for the financial aspects of your business over the next five years.
The plan is too vague
While you don't want to get bogged down with details, an effective business plan steers away from vague language in favor of concrete goals and information. Leave out vague phrases and keep in mind that the object of your business plan is setting up specific milestones, dates, and framework for the management and operation of your business. After stating a few goals, outline the major steps you must take to reach each one.
Claiming there is no risk or competition
Investors know all business comes with risk, so avoid marketing language that claims your business is risk-free. Instead, minimize discussion of risks or emphasize ways to mitigate them. Another related mistake is claiming your business has no competition. No matter how unique the idea or how low the market saturation in your area, you will have some form of direct and indirect competitors. Plan for competition from the beginning and consider how the marketplace for your product or service will change if you succeed.
Article brought to you by USA Corporate Services Inc.
Many entrepreneurs are quick to consider the potential profits of their startup without considering cash flow. While business expenses, marketing, and profits are important, don't overlook how important cash flow is to running your business. How will your business operate while it waits for those profits to come in? How will you pay vendors before the product sells? These are just a couple of the questions you need to ask yourself.
Putting off making a plan
Many business owners avoid writing a business plan until it's absolutely required. You don't need a business plan to form an LLC or incorporate, but banks or investors will probably want a business plan before giving you money. Don't wait until the last minute to create a plan or it won't be strong enough to help you plan for the future.
Writing an incomplete plan
Does your plan cover every aspect of your business? At the very least, a strong business plan will cover products/services, customers, marketing, operations, management, and competition. Address each area of your business, the industry as a whole, and the market so you can plan for the financial aspects of your business over the next five years.
The plan is too vague
While you don't want to get bogged down with details, an effective business plan steers away from vague language in favor of concrete goals and information. Leave out vague phrases and keep in mind that the object of your business plan is setting up specific milestones, dates, and framework for the management and operation of your business. After stating a few goals, outline the major steps you must take to reach each one.
Claiming there is no risk or competition
Investors know all business comes with risk, so avoid marketing language that claims your business is risk-free. Instead, minimize discussion of risks or emphasize ways to mitigate them. Another related mistake is claiming your business has no competition. No matter how unique the idea or how low the market saturation in your area, you will have some form of direct and indirect competitors. Plan for competition from the beginning and consider how the marketplace for your product or service will change if you succeed.
Article brought to you by USA Corporate Services Inc.