Planning is key to efficiency. This principle is applicable in many aspects, including business planning. You need to watch out for any planning mistake that you might commit. What are these mistakes? How can you avoid them?
Establishing a business is a walk in the park. However, the park in question is Jurassic Park. It’s exciting, overwhelming, and you’ll never know what surprises will pop out of the corner; it can be scary. Fortunately, all parks have maps, and when you plan your journey right, you are well on your way.
Importance of Business Planning
To succeed, you need to have a plan. So, business planning is a crucial step that every entrepreneur must take to ensure proper navigation along the way. When you think of it, you really can’t expect a business to blow up after creating it. There should be a commitment to putting action. Ultimately, a sound business plan is what it takes.
When you undergo this process, you avoid the common planning mistakes that entrepreneurs often commit. Moreover, you get to enjoy the advantages that business planning injects into your processes. Some advantages include:
- Clear business overview. A good business plan provides a sheer overall picture of where your business stands and where it aims to go. This helps your organization illustrate guiding principles and motivations as you go along.
- Strategic focus and prioritization. Planning involves a specific definition of your goals. Through this, you’ll be able to strategically gear focus and prioritize according to your plans.
- Smooth change management. Not all things will go as planned. Thus, business planning, which includes exit strategies and pivot analysis, will help you navigate amid possible changes.
- Realistic metrics. Planning projects realistic outcomes that you can use as data that you can leverage when making future decisions. Metrics are helpful indicators of your company’s health status.
- Practical cash budgeting and management. Accounting is essential in business. Through planning, you can connect the dots between your capital and your goals.
In the end, the plan is only as good as how well you execute it. Most entrepreneurs fail because they overlook some steps that result in planning mistakes. Commonly, it’s often too late to realize it, and then that voice in your head exclaims, YOUR PLAN IS WRONG!
Common Mistakes in Business Planning
Realistically speaking, not everything will go your way. And as mentioned, business planning should have change management when things don’t align or simply go haywire. Fortunately, there are things you can do to avoid business failures when you are planning your business.
As they say, you can never win a war if you don’t know who or what your enemy is. So, we compiled the common planning mistakes that entrepreneurs make so you can dodge them as they come.
Unrealistic projections
For example, you want to build a web application that allows users to engage in real-time video and voice calls. You want to complete it within a month. However, you only have two developers, and based on their estimates, it would take four months to complete.
In this instance, you have experts saying that your projection is already unattainable given the resources. Plus, this kind of system requires legal compliance. You can either set a more realistic timeline or workaround by adding more resources to resolve this.
As mentioned above, business planning provides realistic metrics. This means that data and facts should guide your organizational objectives. Be careful not to set unrealistic goals and projections to avoid disappointment and unreasonable effort.
To avoid this, you should always rely on what you have and what you can do. Sometimes, ideas of success cloud the challenges you need to undergo. So, keep your expectations SMART (specific, measurable, achievable, realistic, and timely).
No marketing strategy
It’s an undeniable fact that marketing is what drives the business forward. No matter how great your product or service is, if you can’t sell, you can’t survive. Hence, you should not overlook marketing as a part of your business plan.
Many startup companies nowadays opt for digital marketing as an effective strategy to attract customers. You can do this alongside traditional marketing to optimize opportunities of interest and convert them into sales.
Undefined target market and audience
One of the most common terms in gaming is “Free Hit,” which means to attack and hope for the best. It may work, but the risk of failing is evidently high. In some cases, entrepreneurs build their business with no target market in mind, which is a huge planning mistake.
A wise entrepreneur establishes a brand that knows its target market and target audience to effectively operate its business around. You can’t “free hit” when it comes to business because there is a lot at stake. So, be sure to identify your target market before deploying your brand out the door.
Bad research
Whether it’s about your product or your place in the market, research is essential in any business plan. Take note that the lack of proper information is detrimental to your business’ success.
To ensure that you avoid this, perform research that is relevant to your business. Make sure that your product has a competitive edge against its competitors. Get to know your product’s value and demand in the market.
Talk to your customers and ask for information that will give you insight into developing your product. The more you know, the better.
Ignoring competition
In connection with the previous common planning mistake, knowing your competition has its advantages. If you ignore your competitors, you might miss additional opportunities to improve your business. More often than not, competition is there to let us reflect and see if we can fare in the market.
Ignoring weaknesses
Alongside setting realistic expectations and proper research is an unbiased self-assessment. If you ignore your weaknesses, it will be more challenging to face possible hurdles that you might encounter. This is because you did not prepare how to face such things.
The most common way to address this is by performing a SWOT analysis. You should identify your strengths, weaknesses, opportunities, and threats. If you’re acknowledging weaknesses, it’s easier to develop workarounds or action items and turn them into strengths.
Aggressive timelines
More often than not, quality takes time. Entrepreneurs sometimes become aggressive with timelines to supplement client needs. However, as far as planning goes, you should consider your resource capacity and the necessary steps to release quality products.
For example, in software development, software engineers should be part of creating estimations since it would require their expertise. Additionally, quality assurance should also have time allocation to ensure product performance and stability.
If either of these is rushed, the product may be incomplete or faulty. We are always going to go back to setting realistic expectations and projections.
Inexperience with real costs of business
Experience is the best teacher, and the lack thereof is a disadvantage for any entrepreneur building a business. As a business owner, you will face unexpected challenges that you don’t know how to solve.
There will be stressful days when you still need to function to keep the business running. At this point, it’s not only about monetary costs but also emotional tradeoffs.
In business planning, inexperience can sever potential success. You might make premature decisions. It’s also possible to mismanage your resources altogether. Your dream business could become a nightmare. Hence, you can’t afford to commit these things.
Fortunately, you are not alone. Seek help when you need it in business. If you are new to the startup industry, you may look for mentors who can help you run your business. You can even start finding startup co-founders who can serve parts of the business with their expertise.
In summary, planning guides you to navigate your entrepreneurial journey better. The essence of knowing the common planning mistakes is to identify how you can avoid or resolve them. However, if all still feels scary, never hesitate to call for help.
Full Scale founders, Matt DeCoursey and Matt Watson are expert hustlers in the startup world. They created Full Scale to provide fast and affordable software services for startup companies. They also host the Startup Hustle podcast for entrepreneurs to pick up useful tips and tricks in business.
As part of the company services, we offer a FREE CONSULTATION to talk about your business. Whether it’s about software development solutions or ways to avoid planning errors, we can help you.
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