An idea is central to a successful venture, but it is not enough. You need a solid strategy to transform the dream into a reality. A business plan is the keystone of a venture and often determines the eligibility criteria for a business loan.
Below are some mistakes you should avoid if you seek to give your dream a smooth flight to success.
1. Unrealistic projections and mismanagement of cash flow
The financials are one of the most important aspects of running a business. Cash is the fuel driving the engine of your business. Hence, it's important to have a clear idea of the sources of funding and cash flows into the project.
Mismanagement of cash flow may also push you into bankruptcy.
Thus, your plan must show realistic cash projections and potential earning channels.
2. Focusing on the idea but not execution
Do not overlook boring but important factors in your enthusiasm to turn an exciting idea into reality. A business idea needs to survive the rigorous test of socio-political and economic acceptance to survive and thrive.
Forgetting the who, why, when and how associated with a business plan will result in its failure.
For example, you may come up with a radical idea of a fuel cell. However, the environmentally damaging components and high prices compared to other options will make the plan difficult to execute.
3. Ignoring competitors
Michael Porter lists 'Threat of New Entrants' as one of the five forces of his industry analysis model. Business is not a one-man game and every venture, old or new, is under constant threat from rivals.
An idea may be unique. However, in the modern world, the shelf life of a unique idea is very short. Before preparing the documents for business loans, you must plan to deal with competitors. This will help you get loans at competitive interest rates.
4. Not knowing the target market
Targeting is one of the most important aspects of a marketing strategy, along with segmentation and positioning. The plan must know the audience to which it makes the value proposition.
Every business plan must consider demographic, economic, and social factors. Wrong targeting may lead to wastage of resources, social rejection and lack of revenue.
5. Not prioritising your priorities
A modern business is a sum of a series of operations of varying degrees of importance. A plan must know how to prioritise the crucial ones.
Proper prioritising gives a clear idea of where to invest the limited resources. For example, you may prioritise the handling of operations where you have core competencies while outsourcing the others. This helps you save operational costs in the process.
6. Not enough research
Most modern economies are knowledge-based. If you don’t know enough about your line of business, the chances of success are slim. Before gauging your business loan eligibility criteria, build your plan on detailed research. It must be based on studies from various sources and consider social, political, and legal consequences.
There are various tools you can use to check the soundness of your business plan and put it through a reality check.
Additional read: How to use technology to increase business efficiency
7. Lack of determination and organisation
A plan is nothing if it doesn't make sense to all the stakeholders on board. It is like a statement of purpose to all people investing their resources in your venture. A business plan must showcase determination and commitment on the entrepreneur’s part.
There will be teething problems, but you must review your plan repeatedly to weed out flaws and inconsistencies. As an entrepreneur, you must master the art of creating a holistic and detailed business plan.
Additional read: Six steps to help your business raise finance
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