Business Planning Mistakes You Need to Avoid

So you have a business plan; a solid direction and strategy for achieving the goals you have set for you, your team and your business. But, have you taken care to make sure you avoid getting trapped by the most critical of the business planning mistakes?

Don't panic. While many people make these mistakes, they are easy to avoid.

Business Planning Mistake #1:
Not having a written plan! Companies both large and small often operate without a written plan, and they say, "Well I have a plan." But that plan is in their head! Without a written plan they have nothing to keep them on track when circumstances and life take them over; they have nothing that shows their team what they need to do and why they are doing what they do; they are missing a key accountability tool! Plus, if you can't write where you are going, you can't speak it. And if you can't speak where you are going, you can't tell others where you are going. And without a team that helps you, you can't get there (at least not easily). It is simply too big.

Business Planning Mistake #2:
Working from a plan that is more than one year old! We live in a world of great change and if you are operating from a plan that was written or revised more tha
12 months ago, you haven't likely made the changes necessary to adapt to the change that affects your business, your team, and your customers.

Business Planning Mistake #3:
Not following the plan you write. More business plans than anyone cares to admit end up serving as a doorstop. So why do people write a plan and then not follow it? Many times the author of the plan doesn't want their team to know the plan is in existence because they are afraid of being held accountable for doing what the plan says they need to do, in order to get to where they say they want to go.

Business Planning Mistake #4:
Not being specific enough. A business plan needs to be very clear in terms of what specific measurable results (SMRs) will be produced and the date by-when they will be produced, especially in stating the company objectives, sales goals, and margins. Without these specifics: a) it is nearly impossible to hold anyone accountable for reaching the objective; b) you leave too much room for assumptions and misinterpretation; and c) without specifics, you don't know when you have reached your goal and are actually done!

Business Planning Mistake #5:
Making unrealistic assumptions! In every business plan there is a certain number of assumptions that have to be made. However, in making those assumptions you have to be as realistic as possible. For instance, if you assume in your plan that your potential market will contract by 2% and realistically it will contract by 10%, your entire plan is based upon bogus numbers. What good is a plan if that plan is nothing but a fantasy?

Business Planning Mistake #6:
Not understanding what the financials are telling you (and your investors). There is a reason why companies have financial officers to keep the company's financial affairs in order. It simply takes a person with a head for financials to do them well. However, that doesn't mean that the entire executive team doesn't need to understand what the financial data is ultimately telling you and your investors! If you have to, ask for the financial information in terms that make sense to you. Don't ever accept a financial analysis that you can't explain to someone else!

As you can see, not one of these common business planning mistakes is insurmountable. Just be aware of their dangers and use these tips to avoid them. What's next for you is just waiting for you to claim. So have fun and go for it!