Business plans are a key part of a new business, particularly if you require funding. Here at MoneyTowers.com, we have put together a short guide to the most common mistakes that people make when writing their business plans.

Procrastination
Many people who start a company will only write a business plan when they absolutely have to. If you need funding for your business, the chances are that you will need some sort of business plan therefore it is better to be prepared and get the plan out of the way before your investors or bank ask for it. A business plan is a good idea, even for those who are not looking for funding, because it helps to set goals and targets for the company, and helps you keep an eye as to whether your company is on track or not.

Understanding Cash Flow
Most people focus on turnover and profits and forget about cash flow. So you know how much a product costs and you know your margins and therefore your profits, but what about cash flow? Cash flow can sink a new company if money is not planned properly. Understanding cash flow can make or break your company so it is important that you check your cash flow carefully – if possible, make a cash flow table so you have a good idea of how much money to expect in your bank account each month.

Idea Over-Importance
Ideas are great however don’t over-estimate their importance. You don’t need a new idea to make a business – what you will needs is heaps of time, dedication and perseverance (and usually a little money too!). New ideas are often harder to sell than existing ones because most people like to follow rather than lead. Whilst ideas are important, they will get nowhere if you don’t have the business backing and acumen to help the product sell.

Meaningless Talk
They might sound good to you, but leave out buzz words and phrases and keep your plan simple, and easy to understand and follow. The simpler the plan, the easier it will be to follow and to check to see if your company is hitting it’s targets. Key things in your plan are dates, budgets, responsibilities and milestones, and not how many buzz words you can fit into a page! A simple, well thought out business plan is much better than a flashy presentation that means nothing at all.

One Size Fits All
Tailor your plan to your business – there are plenty of templates out there that you can use, but don’t copy the data. Make sure that your targets and expectations are tailored to your company and your market. Business plans can also be tailored to suit different tasks – they can be focused on the financials to show to an investor, they can be a sales document to encourage new investment, they can be action plans, marketing plans or even personnel plans. One size does not always fit all!

Unrealistic Goals
Many people make the mistake that although sales will grow slowly at first, they will eventually shoot upwards in a massive surge. Have conservative predictions as these are far more realistic – and realistic predictions are more easily defended than huge, bold ones.

Fear
Doing a business plan is not that difficult so don’t worry about it! You don’t have to be a genius to write one and there are plenty of resources to help you out such as books, software and websites.

If you are looking for more help on writing your business plan, there is a short guide here.

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