Common Practical Mistakes in Business Plan
This article will take a look at practical reasons on the ground not just on theoretical knowledge which most article writers do.
Every business aims at making profit. However, it does not always go like that as some businesses struggle to make little profit, while other businesses make losses because of different business mistakes and misguidance by their business plans.
Business plan is a written document that describes the business idea and all the relevant internal and external elements involved in launching a new business venture. It is used as a road map to your business by making your business implementation easy. This article will give in detail 6 practical mistakes in the business plan.
6 Common Real Mistakes in Business Plan
The following are the mistakes in business plans.
1. Lack of proper market research
Most business plans are based on theories. The majority of people who prepare business plans use their theoretical knowledge which they learnt at school, and they want to convert this in writing turning it to practical.
Majority of business plans are prepared without conducting market research on the product in their business plan, and this result in coming up with a non workable business plan.
Doing market research before preparing your business plan helps you to link what is on the ground and what will be on the paper. You will be surprised in most cases that, when you come up with a product theoretically and put it in writing on your business plan, it will perform contrary on the ground, because your business plan will focus on what is on paper and in your head, instead of what is on the ground.
This is considered great mistake, which majority of business plan writers do.
2. Invalid business opportunity
Not each and every business opportunity described in a business plan is a real business opportunity on the ground. As we have already said, the majority of business plan writers are based on theoretical knowledge instead of practical knowledge. This makes them to prepare a document which they call a business plan, but yet in real sense it's just trash, as the business opportunity which they describe as an opportunity is just mere idea, non working one on the ground, so you have to be very careful.
Failure to use a right business opportunity will make you spend money on things which will consume your resources without bringing back anything in the form of profit.
3. Lack of expertise in preparation of business plan
Nowadays, everyone is looking for money. For this reason, some individuals, non professional ones are into business plan writing business, just to scam people. They learn how to write a business plan in the morning and find a client in the afternoon, and submit her or him a business plan the following day, just to get paid with a poor quality work, which will fail to work on the ground.
What this point is trying to communicate is that, not each and every business plan you see is worth it. You should be careful who to hire to write a business plan for you, as others will just come up with wrong projections which will not work on the ground.
4. Failure to come up with the right price
Sometime you can meet an expert, who successfully come up with a right business opportunity and a right product, but in his or her written document, he erred in coming up with a right price for your product. In this case, when you take your business plan on the ground, you will see that people are interested in your product, but will not buy your products. In this case, you will still make losses due to some sack costs and other fixed costs.
This problem can be fixed by doing early market research before preparing your business plan.
5. Invalid product
Not each and everyone product mentioned in a business plan is valid. Some products are wrong. What we are trying to mean here is that, we can come up with a right business opportunity which will solve people's problems, but yet the product which you believe will solve their problems is wrong.
An example here is Led bulb repairing projects. You will think here that people's problems will be solved by lowering their home spendings on repaired Led bulbs. In this case, you can repair thousands of Led bulbs and sell them at a lower price, but yet those bulbs will not stay long, and this will make your customers even spending more. In this case, the more they notice your bulbs does not last long, the less they will be willing to buy your products. In a long run, you will have no one to buy your products.
What this point is trying to tell us is that, sometimes we successfully identified people's problems to be solved through innovations, but we end up coming up with a wrong similar product, which does not work on the ground in a long run.
6. Wrong location
Sometimes an expert in writing business plan may successfully come up with the right product and right cash flow projections, but fails to come up with right location where the business will be implemented successfully, and this makes the business plan of no use.