Does your business plan contain these warning signs?

by khawaja

Does your business plan contain these warning signs?

Article by Chris – Smart Business Plans Australia

Every business should have a business plan, no matter how big or small. Many don't of course, but the businesses that are focused, structured and efficient tend to have taken the time to really think about what their goals are and the steps they need to take to reach them.

That said, there is no point preparing a business plan if it is not realistic. It's important to take the time to step back and think about how your business will operate in the real world.

Here are some signs that your business plan might not realistic:

You're going to sell one million units in 12 months

This is common – as many new business owners simply work out the cost and time to sell one unit, then multiply it out over a year. What they don't think about is how many customers are require to sell at that level, how much time it takes to set up the distribution channel, how many staff you will need to support sales and post-sales at that level. If it number in your forecast looks like a lot, it probably is. Set conservative targets for your business and consider constraints in setting your forecasts.

You have a feeling your product will sell, you just don't have proof

Unfortunately, friends and family are unlikely to tell you that your business idea is poor. If that's your only source of market research, you may be in trouble. Proper research of your business idea doesn't have to be difficult, but it is crucial to tapping into what your target market really thinks about your idea.

You are going to beat the competition based on price only.

Competing of price alone is a very risky strategy. It puts pressure on your profit margins immediately, and often means you need to move large volumes in order to make reasonable returns. It also often leads to a 'race to the bottom' as competitors lower their prices as well. When this happens, whoever has the deepest pockets will usually win, at the expense of other competitors.

You are going to beat the competition based on service only.

When you have a small number of customers, you are able to give them a high level of focus and service. But as you grow, you can't sustain the same amount of attention and time. Is might be OK if service level expectations are realistic, but if not this type of model is not sustainable if you want to grow.

You don't have measurable business goals.

Too many business plans state goals that are not measurable. Things like 'to improve my lifestyle' sounds nice but how do measure your performance against a goal like that?

All goals should follow the 'SMART' formula, that is:- Specific – exactly what is it you to achieve? – Measurable – how will you measure your progress against your goal?- Achievable – do you have the resources and platform to achieve your goal?- Realistic – is it realistic to achieve the goal you have set?- Time bound – within what period do you need to achieve the goal?

About the Author

If you need a professional business plan writer to help your business grow, contact a professional business plan consultant today.

Business plan layout and writing into 8 easy to remember sections by business plan and fund raising expert Andrew Millet, chartered accountant, principle of Wisteria, a small business advisory and accounting firm based in Edgware, North London, UK. www.wisteria.co.uk
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