The Most Common Pitfalls of Bad Business Planning
A good business plan has elements that are critical to the company’s success. When you read a good business plan, you will learn important information such as:
- how to streamline operations
- how well plans perform against projections and budgets
- how well your personnel performs its jobs
- what changes need to be made in your organization in order to move forward
When you are putting your business plan together, you need to remind yourself of how supremely important the business plan is to your company’s success. There are a lot of pitfalls you run across during a business planning session that can threaten to derail your planning process. When you recognize the pitfalls, then you can avoid them.
One of the biggest misconceptions that business owners have about business planning is that it is an insignificant part of running a business. Your business plans are critical to successfully operating your business and you need to put in the hard work to make sure that your plans come out properly. Avoid using any guessing when you put together your numbers. You need to have sources to back up all of your figures at all times. When you are developing your projections, you need to base those projections on real numbers. If you start guessing, then you are risking the future of your company.
The biggest pitfall people experience during business planning is the temptation to overestimate the abilities of their company or underestimate the competition. When you do your comprehensive research, you will see the real numbers that will make up your plan. If your company has a history of growing 10 percent each year, then it is unreasonable to expect 20 percent growth when you have nothing to back that number up. Keep your projections realistic and make sure your business plan utilizes the real resources that your company has.
A business plan is not something you create and then never change. Your industry and your company are constantly changing. It is dangerous to expect that those changes are not going to affect your business. A big pitfall is the tendency to avoid changing the business plan to compensate for changes in the business climate. Your business plan is an important road map for your company. The only way that a business plan remains a useful tool is if you update that road map when the roads start to change.
When you create a business plan without getting input from your managers and key employees, then no one feels like they have a stake in the success of that plan. You hired your team because you were impressed with their backgrounds and abilities. When it comes time to start business planning, you need to utilize those backgrounds and abilities to your advantage.
One Plan per Idea
Possibly the biggest pitfall that business owners run across in business planning is not writing separate business plans for each individual business idea. Do not try to create hybrid plans that combine several ideas. When you combine ideas, it does not allow you to create clear and comprehensive ideas.