TOP 10 BUSINESS PLAN MISTAKES

An  Excerpt from 'Entrepreneur's INSTANT STARTUP GUIDE'

1-MISUNDERSTANDING THE PURPOSE: IT’S THE PLANNING THAT MATTERS, NOT JUST THE DOCUMENT. Planning is a process of setting goals and establishing specific measures of progress, then tracking your progress and following up with course corrections. The plan itself is just the first step; it is reviewed and revised often.

2-DOING IT IN ONE BIG PUSH:INSTEAD, DO IT IN PIECES AND STEPS. The plan is a set of connected modules, like blocks. Start anywhere and get going. Do the part that interests you most, or the part that provides the most immediate benefit.

3-FINISHING YOUR PLAN. If your plan is done, then your business is done. That most recent version is just a snapshot of what the plan was then.

4-HIDING YOUR PLAN FROM YOUR TEAM. It’s a management tool. Use common sense about what you share with everybody on your team. But do share the goals and measurements, using the planning to build team spirit and peer collaboration.

5-CONFUSING CASH WITH PROFITS. There’s a huge difference between the two. Waiting for customers to pay can cripple your financial situation without affecting your profits. Loading your inventory absorbs money without changing profits. You don’t pay your bills with profits.

6-DILUTING YOUR PRIORITIES. A plan that stresses three or four priorities is a plan with focus and power. A plan that lists 20 priorities doesn't really have any.

7-OVERVALUING THE BUSINESS IDEA. What gives an idea value isn’t the idea itself but the business that’s built on it. Either write a business plan that shows you building a business around that great idea, or forget it.

8-FUDGING THE DETAILS IN THE FIRST 12 MONTHS. By details, we mean your financials, milestones, responsibilities and deadlines. Cash flow is most important, but you also need lots of details when it comes to assigning tasks to people, setting dates and specifying what’s supposed to happen and who’s supposed to make it happen.

9-SWEATING THE DETAILS FOR THE LATER YEARS. As important as monthly details are in the beginning, they become a waste of time later on. How can you project monthly cash flow three years from now when your sales forecast is so uncertain? Sure, you can plan in five, 10 or even 20-year horizons in the major conceptual text, but you can’t plan in monthly detail past the first year.

10-MAKING ABSURD FORECASTS. Nobody believes absurdly high ”hockey stick” sales projections. And forecasting unusually high profitability usually means you don’t have a realistic understanding of expenses.