So you have a great idea for a new business and you are ready to move forward. You need some financing and to hash out all of the details. It’s time to develop your business plan.
Many entrepreneurs make key mistakes at this step, some of which can ultimately result in the demise of the company. Here are some key mistakes that way too many entrepreneurs make:
1. Grossly overestimating sales – Estimating your sales is important to ensure that your idea can be profitable. Many entrepreneurs think their products will be the next big thing. Some will, but most won’t. It’s important to take a realistic look at sales projections to ensure that your business can operate at a profitable level if sales don’t come in as you “hope.” Do research on the competition to ensure your sales projections are reasonable.
2. Failing to get professional help – There are a number of professionals out there who can help. Consult an attorney to make sure your needs are met with how you structure your business. Work with a business plan development firm to have a professional business plan developed to ensure all aspects are accounted for. Have a CPA do your taxes. It’s important to know that you can’t know everything and you sometimes have to pay for someone else’s knowledge.
3. Going in without a good plan – You should never start a business without a good plan. If you don’t know exactly what you are going to be selling and if it can profitable for you, why would you jump in to it? Sure, new businesses are exciting, fun, and filled with the possibility of significant profitability. Don’t blow it by jumping in without a good business plan in place.
4. Failing to spend enough time on your Executive Summary – Many entrepreneurs spend very little time writing their Executive Summary. Just because it is only one or two pages doesn’t mean that it only deserves the attention of a typical one or two pages. This is the first thing many investors will read. Treat it that way. Having a poor Executive Summary is like showing up for a professional job interview wearing jeans, a football jersey, and a backwards baseball cap. It certainly doesn’t give the best first impression, regardless of what the rest of your business plan looks like.
Avoiding these common mistakes is crucial to approaching your business plan the right way and gives you the advantage on your path to success!