Business Planning, whether at the start-up of a new venture or during its growth, requires an integrative approach. It is important that all crucial aspects are addressed and balanced. The following tips show some of the common pitfalls that should be avoided in the business planning process:
- Certain aspects of a detailed and integrated business plan are ignored. A typical example would be market research. This is often due to the cost and time involved, lack of know-how or ignorance of the importance thereof.
- The different aspects of the business are not match. It is for instance important that there is a good fit between the team and the opportunity.
- Over-optimistic projections are used. Sales and market share projections are quite often not realistic.
- Assumptions are not tested and adjusted where necessary. An example would be where it is assumed that $x of marketing will result in $y of sales.
- Not enough time is allowed for the business planning process. The importance of proper planning is often negated in favour of execution.
- The reverse of tip number 5 also occurs regularly. Especially new entrepreneurs tend to fall in the trap of over-planning and almost seeing the business plan as an end in itself. A fine balance should exist between planning and execution.
- The use of resources is underestimated. More people, time and materials are normally needed than anticipated. This cause budgets of capital and cashflow to be insufficient with potential grave consequences.
- Critical obstacles and even fatal risks are ignored. It is important to work through and resolve any potential problems and not to turn a blind eye.
- Measurable and achievable goals and mileposts are not set.
- A big problem, of adhering to the requirements of integrated business planning, is that entrepreneurs often have preconceived ideas that they don’t budge from. This can be due to a lack of knowledge combined with specific personality profiles. It is extremely important to be flexible, acknowledge when you are wrong and to get assistance when needed.
Copyright© 2008 – Wim Venter