SEVEN BUSINESS PLAN ERRORS THAT BUSINESS OWNERS COMMIT IN NIGERIA
Despite the fact that each small business is different, many successful ones share a basic foundation: a business plan. Researching and developing a business plan is a crucial step in sketching out the path your company will take, as well as an essential step in obtaining money for beginning expenditures or expansion. Avoid these typical business plan errors/mistakes to save time and energy.
TOP SEVEN BUSINESS PLAN ERRORS THAT BUSINESS OWNERS COMMIT
- Not making one
As an entrepreneur, you’re probably more interested in doing the thing you want to do than in developing a business plan. “If you don’t know where you’re going, you’ll wind up somewhere else,” Yogi Berra once said. You’re more likely to waste time and energy following unproductive avenues and spreading yourself thin if you don’t have a plan. Make finishing your plan a top priority to channel your energy, remain on track, and increase your chances of getting a small business loan.
- Being unrealistic
If you’re not willing to ask tough questions, conduct thorough research, and be honest with yourself, this can happen on a variety of levels. Your company strategy must wrestle with the realities of the marketplace, financial truths, and the entrepreneurial landscape, not the best-case scenario or the way you think things will go. Make an effort to be realistic in a few crucial areas:
Financial forecasts: Don’t overestimate or pad your future profit predictions. At best, you’ll appear inexperienced, and a bank will be hesitant to offer you money because of it. In the worst-case scenario, they’ll lend you the money and you’ll default or file for bankruptcy.
The idea that you have little — or no — competition is a major red flag in many company concepts. “You’re always battling for funds,” said Manuel Batlle, RISBDC counselor. Even if your product is one-of-a-kind, your target market still has options for how to spend their money. You must consider how you will persuade your target market to part with their money.
It makes no difference what you want to manufacture or sell if you conduct market research. Someone must be willing to purchase it at a price that makes it profitable to sell. No company plan is complete without current market research to fully comprehend market trends, client interest, rival performance, and other factors of product or service feasibility.
- Poor executive summary
According to RISBDC business consultant Josh Daly, a lender will read the executive summary of your business plan and “give it the sniff test, then the gut test.” Depending on their instincts, the lender may determine whether or not to continue reading. As a result, the executive summary is worth paying attention to. It should be understandable to someone with no prior business experience, and it should make the case for your company’s viability in a few short, concise points. Daly suggests writing 1-3 words on your company’s history, client base, market, competitors, qualifications, and staff. A two-page summary should be able to persuade your audience to continue reading. If you want to get financing, you should tell potential lenders how much money you want to borrow and what you plan to do with it right away.
- Too long
A concise and well-organized business plan should be 5-10 pages long for the majority of small firms. When a graph, chart, or map would tell the story more effectively, a compelling business plan will utilize visuals to prevent wordiness. An appendix can contain additional financial estimates or research data. Longer plans don’t always provide more or better information, and they run the danger of losing their audience before they’re even read.
- Not focusing on the team, and your role as the head
No small business owner has all of the skills and personality traits required to take a company from the seed of an idea to the world on its own. Identifying and addressing shortcomings in your experience and education, as well as explaining how you’ll overcome them, is appropriate and vital. It’s also important to introduce your main team members quickly, explain their contributions to your organization, and show how, as a whole, your team is well-rounded and equipped to face the difficulties ahead.
- Sloppy mistakes
Typos, grammatical errors, and bad formatting are all foes that can detract from your first impression. Because it will speak for you, your business strategy must appear professional. Make use of spell-check. Reread your strategy. Get plenty of rest and re-read it. Then, even if you’re an excellent writer with a keen eye for detail, have someone else go over it to make sure you didn’t miss anything. Never undervalue the value of a new pair of eyes.
- Poor Cash Flow Management
Cash reigns supreme. The most common blunder in business is failing to keep track of cash flow. Even if the business is thriving, if you do not carefully handle your funds, you could soon be out of business. Make sure payment schedules are explicit and agreed upon, then stick to them; a slipping payment schedule indicates a breakdown of some sort, even if it’s just a mail delivery issue. You should keep track of your accounts receivable turnover ratio, or how quickly money is received once a customer receives an invoice. You must also accept all types of digital payments. Encourage the use of EFT (Electronic Funds Transfer) and wire transfers. Offer early payment discounts, such as 2% off for Net 10 payments. It is a company standard to never give discounts for Net 30 payments. Demand at least a one-third deposit wherever possible. Begin your journey. Demand at least a one-third deposit wherever possible. When payment is not received on Day 31, begin the collection process, and don’t be afraid to contact to search down your funds.
Read Also: HOW TO WRITE A MINI BUSINESS PROPOSAL
OTHER ERRORS/ MISTAKES BY BUSINESS OWNERS
Poor Project Management
There are two types of project management: external and internal. Internal management is concerned with how you manage and communicate with your team, whereas external management is concerned with how you manage and interact with your clients. You need to be clear about what is expected and when it will be delivered to clients. After the contract is signed, go out of your way to define everything in writing in a project plan. Find out what clients expect and what deliverables you’ll need from them to meet their objectives. Make sure you understand your own deliverables and when you’ll be able to meet them. A common blunder is failing to manage scope creep, which is a major problem in professional service firms. To keep the customer in line, you may always redirect them to the project plan. Use regular staff meetings to convey deadlines and assign duties while managing your team. To keep track of client communication and version control on all work papers, project management software like Slack and Basecamp can be useful.
Confusing Enthusiasm and Capacity
Small business entrepreneurs, particularly solopreneurs, frequently overestimate their capabilities and underestimate the amount of time required to accomplish a project. In order to make a profit on your labor and avoid working yourself to death, you must keep meticulous time records in your firm. You must schedule time to work on your business, which is the strategy component that keeps the company running smoothly. In order to deliver your product or service to customers, you must work in their company. It’s all too easy to get caught up in the business and forget about securing the next customer.
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