Congratulations! You’ve decided to leave your 9 am to 5 pm job – so what happens next? Before going all in, it’s important to spend some time laying the groundwork. Your first step to a successful entrepreneurial debut is a well thought out business plan.
Developing a foolproof business plan isn’t easy and you might overlook some key elements along the way. We’ll be exploring the most common mistakes found in business plans and how you can avoid them.
The Lean Startup Plan for New Business Owners
A good business plan is a guide that navigates you through each stage of starting and managing your business. Use this plan to give your business structure, direct resources, and grow it into your ultimate vision. The U.S. Small Business Administration recommends an executive summary, company description, market analysis, your organizational structure, product line, marketing plan, and financial projections. If you plan to seek out funding, many investors and financial institutions will want to see a business plan.
There are two common formats: traditional plans and lean startup plans.
Traditional Business Plans – the most common form of business plan that uses a standard structure and requires a significant amount of detail. These plans are often more work upfront and could be dozens of pages long.
Lean Startup Plan – these plans are less common but growing in popularity. These still require a standard structure but with less detail. These focus on the summarization of key business elements, which we will expand on later. Most lean plans take an hour to create and are no more than a page in length.
Keep in mind that every business plan will be a little different. That’s ok, as long the plan meets your needs and accurately describes your business structure.
Mistakes to Watch Out For in Your Business Plan
Even the most detailed plans can’t predict and account for every situation a business could run into! The best thing you can do for your business is develop a plan free of the most common mistakes.
1. The Lack of a Plan
It might seem a little redundant that the most common business plan mistake is the lack of a plan. But one of the biggest reasons new business owners skip a plan is because they don’t manage the time for it. While getting a business together is an effortful and timely process with many things to consider, skipping on the detailed planning stage will only hurt you in the future.
Even if you only have the beginnings of a full-fledged business plan, it’s a start! Remember that you will always be building on your plan – just make sure you aren’t making it to sit in the back of a desk drawer!
Lean business plans can be created quickly. It doesn’t require as much initial work as a traditional business plan and includes:
- What is your value proposition, the value your business brings to the market?
- Who are you trying to reach?
- Your business won’t be for everyone, so be specific in who you’re catering to.
- Where will you interact and build relationships with customers?
- What will make your customer service exceptional?
- Where will you reach your customers?
- What online platforms will you use?
- What will you do in person?
- What will you do to make profits?
- What do you think will be your highest costs?
- What costs will you reduce?
- Where will you maximize value?
- Who are your partners?
- What roles do they fill? Ex. suppliers, subcontractors, manufacturers.
- Who are your competitors?
- What gives you the competitive advantage?
One of the best analogies to understand the mistake of skipping the planning stage: Business owners are often caught up in the little things and can sometimes miss the big picture. Going into a new business situation without some form of a business plan is like fighting a fire without water.
2. Resistance to Change
If there’s anything that we learned over the last year, it’s that we need to be able to adapt or change at a moment’s notice. When you work on a business plan, it should never be finished. You should constantly try to fine-tune it as things change.
One mistake that many new business owners face is that very few people embrace change willingly (at first), so when we’re asked to change a developed business plan at a moment’s notice, we freeze. The problem isn’t with the plan; it’s with our resistance to changing the plan even when we know we need to.
When drafting your business plan, maintain the mindset that this should be a flexible guide and that for your business’s success, sometimes it can be best to change course.
3. Losing Focus of the Original Goals
When you chose to leave your 9 to 5 job, you did it because you had a vision. You believed in this vision, or else you wouldn’t have left the stable job you already had. In the hustle and bustle of starting something new, you might have strayed from that vision. The good news is that it isn’t too hard to get back on track.
As your business grows and you expand on your business plan, take a minute to ensure that it’s still on track to fulfill the goals you originally set. Did you start this business because you wanted to work in a stress-free setting? Are you offering a product or service to people that you saw a need for in the community? Is your goal to make enough profit in your first year to pay off your home?
Personal goals matter as much as business ones do.
4. Making the Process Overwhelming
Are you struggling to make progress on your business plan because you’re making the process overwhelming? Don’t overthink and make the plan harder than it needs to be! Your business plan doesn’t have to win awards or cater to everyone. The only other people reading it besides yourself and perhaps your team are those investing in your business. Oftentimes the investor is less concerned with what’s on the paper and more concerned with how you portray, sell, and execute your plan.
Still, worried it won’t be good enough? Check out this free template recommended by Forbes and fill it with your business information!
Keep Up With Your Business Plan
If there’s anything you should take away from these common mistakes, it’s that your business plan is always evolving. You can’t expect it to be perfect when the market and the world is constantly changing. Your business plan is just the guide to your goals and dreams. The best thing you can do is have one ready to follow.
Hatch Card as a Safety Net
Don’t forget, if it rains or pours, you can always rely on Hatch. The Hatch Card gives your small business a line of credit that comes in the form card. You can use it for daily purchases or for an emergency and pay on it like you would a regular credit card. We’re a unique small business lender with:
- A quick and easy application process
- No requirement for previous business history often needed for financing
- Access to your funds when you need it through the proprietary Hatch Card
To find out how you can add a safety net to your business plan, check out more about the Hatch Card!