Business Plans - Avoid the common Pitfalls
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Business
plans can be
tricky or uncomfortable things to write, balancing the obvious concerns
of the
bank manager against your own over whelming confidence can be a real
balancing
act. Appear too confident with your sales predictions and the banks may
fear
that you haven’t considered or allowed for any contingencies, be too
pessimistic with your sales predictions and the profits may not be
forthcoming
in your plan and further concerns are raised.
Easy
Offices is going to
look at the common mistakes and pitfalls of writing a Business Plan
throughout
this week, we’ll
try and help you
understand the views of the banks, what they may look for and how you
can
address those concerns. We’ll also point out the importance of the
Business
Plan for any business, start up or established, and how it should be a
dynamic
entity, evolving with the business and the business environment. The
plan needs
to be flexible but resilient enough to not only cope but conquer the
current challenges
all businesses face in today’s marketplace.
What Makes Business Plans Fail?
Over
confidence is
without doubt the main reason for failure! Whilst it’s obviously
important to
be optimistic and confident it’s essential to be able to temper one’s
enthusiasm
long enough to be honest and realistic.
‘Fudging
the numbers’
when applying for a loan or when raising funds may appear better on
paper or
potentially even to your bank manager but what happens when the figures
aren’t
realised or forthcoming? Whilst
fixed
costs such as rent, loan repayments or hire purchase agreements are as
the name
implies, not changeable, they will need to be paid at a set date.
Flex your
sales forecasts
up and down by 10,20 or even 40% to reflect how your cashflow will be
affected.
This will provide an insight into what you have to pay with limited
funds and
can help you organise how and what you can cut back on to balance the
figures.
It’s essential to update your cash flow forecast when you have started
trading
so that actual sales figures can be entered alongside the projected
figures to
see how your plans are affected.
Market research – Don’t even consider
skipping this step!
This is
probably the most
important step any potential new business owner can take but it’s
amazing how
many companies miss out this vital step. Check out the competition,
scan
websites for information, check out the Facebook, Google + pages and
Twitter
feeds to see how companies that are actually trading do things.
What do
they sell and for
how much, what quality are the products that they sell and do they
offer value
for the customer? Perhaps you’re in a service industry where the direct
comparison of products isn’t relevant, check out the companies that
they do
business with – what size and scale are they? You need to ask yourself
as a
potential business owner the questions your potential customers are
asking your
competition.
Two great
questions to
ask yourself in regards to Market Research:
1.
If
I was approached to invest in this business, as you are approaching the
banks,
would I invest my hard earned money?
If
not,
why not? You may have identified potential weaknesses in your planning.
2.
Is
this a product or service I would purchase or pay for?
If
not, why not? You may have identified potential weaknesses in your
planning.
About the Author
Easy Offices
(UK) was formed in 1999 and since then has grown to become one of the
UK's leading specialist advisers on serviced offices, office space and
virtual offices around the country. We offer
solutions to both businesses and individuals. You
can access our service online, by telephone on 0808 231 8103.
Authors Google+
Follow us @Scopulus_News
Article Published/Sorted/Amended on Scopulus 2013-09-17 10:38:28 in Business Articles
