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The Top 50 Business Plan Mistakes to Avoid – Part Two

The Top 50 Business Plan Mistakes to Avoid – Part Two

This is Part Two of my previous article on the Top 50 Business Plan mistakes. I have been writing business plans for over twenty years and have seen a lot of different mistakes companies make when developing business plans. Good business planning comes from experience, by trial and error. I have assembled the top 100 mistakes commonly made in business planning so you can avoid them. Here are the last 50 (includes three bonus ones)…

1) Missing significant market changes caused by economic, social, demographic, technological and other trends.

2) Not effectively segmenting your market.

3) Presenting your evidence to make your market appear subservient to your Company’s needs, instead of the opposite.

4) Underestimating Competitive, Potential Strength and Edge.

5) Boldly declaring and assuming you have no competition.

6) Unaware of Competitor’s market plans.

7) Not differentiating effectively between Sales and Marketing. Sales = dealing directly with customers. Marketing = enticing the customer to consider your product or service.

8) Justifying your Pricing Strategy solely by the cost to produce, market and sell your product or service without considering market and customer price tolerance.

9) Assuming your Distributors will give your Product or Service equal sales time without having an Agreement of such.

10) Not effectively targeting your markets by attempting to fulfill many lucrative yet unrelated market gaps.

11) A Marketing and Sales Strategy that is too broad or unachievable.

12) Underestimating the significance of Brand Name and Awareness and Product Packaging.

13) Failure to assess your Manufacturing Process, Operations and Alternatives in terms of costs, capabilities, serviceability, delivery and such.

14) Inefficient Plant, Factory and Workplace Layout.

15) Failure to manage costs.

16) Poor Inventory Control Planning: No balance between meeting demand and minimizing costs via ordering, production, handling and storage, capital allocations, parts and product shortages, etc. Inadequate Inventory Control System.

17) Failing to clearly isolate and identify all product or service costs (i.e. fixed, variable, direct, and indirect).

18) Poor Personnel Management Plan: Poor hiring practices. Lack of quality Management practices.

19) Failing to plan for Long-Range needs and changes in locations, facilities, equipment and machinery.

20) Having a Management Team with vastly unrelated experience to the industry you are in.

21) Missing Non-Compete and Employment Contracts which protect the proprietary nature of your business.

22) Giving up too much ownership to attract and attain good people and management or compensating such people too much without basing your incentives on achieving Strategic Milestones, by creating a paradigm in which an equitable payback occurs for the outlays to key people.

23) Absence of a prestigious, experienced, unpaid, active and objective Board of Directors (“unpaid” not referring to equity ownership).

24) Lack of a Succession Plan and Crisis Management Plan in the event of losing key people.

25) Not having enough ownership to offer in the event second round funding becomes necessary. Lack of strong equity to leverage funding goals and terms.

26) Failure to solicit advice and support services from mentors, competitors, business consultants, legal counsel, accountants and financial advisors.

27) Inadequate accounting system and poor record keeping.

28) Failure to devise a Management Strategic Plan which addresses how to encourage the best possible performance of your people.

29) No clear lines or authority and accountability. Poor Management control systems.

30) Nonexistent staff growth plans.

31) Poor Training Procedures.

32) Too much emphasis on Top Heavy Management (i.e. too many chiefs, not enough workers).

33) Lack of Team Building and goals. Little coordination and communication between Departments.

34) Lack of a solid Strategic Planning Process and Direction.

35) Unrealistic, unattainable Strategic Milestones given available capabilities, resources and time frames for completion.

36) Lack of Alternative Plans in your Strategic Planning Process.

37) Failure to look ahead and plan for ways to improve Sales and Operations.

38) Having an established Strategic Process which doesn’t adequately manage changes in the market, production or service interruptions, not meeting scheduled tasks and deadlines and other unanticipated challenges.

39) Absence of an Objective, Honest Assessment of the downside.

40) Failure to mention and plan for pending or potential litigation or other legal liability issues.

41) Unreasonable or non-quantifiable Assumptions made in your forward looking outlooks and projections.

42) Underestimating operating expenses, taxes and hidden costs. Lack of Financial Contingency Planning.

43) Terms of your Financial Deal Structure unclear as to minimum investment, return on investment, payback strategy, exit strategy, financial terms, payback period and so forth (basic proposed structure from which fruitful negotiations can commence).

44) Risk is too high for the offered Potential Return.

45) Lack of Founders’ Cash Investment into the company (10-20%).

46) Amount of Stock offered is insufficient for the proposed Risk and Level of Investment.

47) Failing to be flexible in negotiating the Financial Structure of your project, deal or venture.

48) Lack of an Exit Strategy for Investors or alternative Investor Exit Strategies. Absence of a Liquidity Strategy.

49) Failing to identify the Tax Benefits of a given Investment or Finance Strategy.

50) Failure to project the downside (have best case, worst case, expected case scenarios), as well as, have a Plan in Place to counter its negative effects.

51) Not having an Accountant review your Financials.

52) Lack of a proactive system to track, update, revise, redefine, refine and change your Business Plan as situations and events occur.

53) Failure to fully implement your Business Plan into Company Operations.