Avoid These Common Business Plan Errors

Business Start Up Guides

By: Tim Berry

President, Palo Alto Software
�2000 All Rights Reserved

1. Putting it off
Don\'t wait to write a plan until you absolutely have to. Too many businesses make business plans only when they have to. Unless the bank or the investors want a plan, there is no plan.

Don\'t wait until you have the time. \"There\'s not enough time for a plan,\" business people say. \"I can\'t plan. I\'m too busy getting things done.\" The busier you are, the more you need to plan. If you are always putting out fires, you should build fire breaks or a sprinkler system. You can lose the whole forest for too much attention to the individual trees.

2. Cash casualness
Cash flow is more important than sales, profits, or anything else. If you have only one table, make it the cash flow.

3. Idea Inflation
Plans don\'t sell new business ideas to investors. People do. The plan, though necessary, is only a way to present information. Investors invest in people, not ideas.

Don\'t overestimate the importance of the idea, particularly the importance of the uniqueness of the idea. You don\'t need a great idea to start a business, you need time, money, perseverance, common sense, and so forth. Very few successful businesses are based on entirely new ideas. A new idea is much harder to sell than an existing one, because people don\'t know what it is.

4. Fear and dread
Doing a business plan isn\'t as hard as you think. You don\'t have to write a doctoral thesis or a novel. There are good books to help, many advisors among the Small Business Development Centers (SBDCs), business schools, and there is software available to help you (such as Business Plan Pro, and others).

5. Spongy, vague goals
Leave out the vague hype about being the best, the meaningless babble of business phrases without roots in facts. Remember that the objective of a plan is its results, and for results, you need tracking and follow up. You need specific dates, management responsibilities, budgets, and milestones. Then you can follow up. No matter how brilliantly thought out or brilliantly presented, it means nothing unless it produces results.

6. One size fits all
Tailor your business plan to its real business purpose. Business plans can be different things: they are often just sales documents to sell an idea for a new business. They can be detailed action plans, financial plans, marketing plans, and even personnel plans. They can be used to start a business, or just run a business better.

7. Diluted priorities
Remember, strategy is focus. A priority list with 3-4 items is focus. A priority list with 20 items is something else, certainly not strategic, and rarely if ever effective. The more items on the list, the less the importance of each.

8. Hockey stick shaped growth projections
Have projections that are conservative, so you can defend them. When in doubt, be less optimistic.


Tim Berry, President of Palo Alto Software and author of CPA\'s Guide to Business Planning and Hurdle: The Book of Business Planning. Tim is a frequent speaker on business planning topics and has given business and marketing planning seminars in English and Spanish on four continents. He is the principal author of several successful software packages, including the #1-rated software for developing a business plan, Business Plan Pro. You can contact Tim at [email protected], or go to his website to order business plan software at www.paloaltosoftware.com.

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