Your business plan is your roadmap to entrepreneurial success. You want it to be as complete and accurate as possible – to account for all possibilities. But no one is perfect and no business plan is perfect. Chances are, you’re missing something. It may be something minor, but it could also be a serious pothole on your road to success. So how do you find those gaps? And what can you do about them? These are three of the biggest gaps entrepreneurs leave in their business plans.
1. Your “It Factor”
There are, literally, millions of new businesses out there. How does your business stand out in a sea of small new companies? Does your business offer a product, service, or genius tech development that nobody else has? Or if your business model revolves around a tried-and-true service or product, are you putting a spin on that classic to differentiate it from the pack?
Take the time to look at your product or service and really think about the niche you’re aiming for – if it’s already, full, then your business plan has a serious gap. It’s a lot harder to succeed if you’re the same as every other startup out there. Find your “it factor.” It’s a crucial part of your business plan.
Your “it factor” is going to inform a lot of the rest of your business plan. It’s what you’ll use to get investors interested. It’s the core of your branding. It’s what will bring customers to you over the competition. So don’t skip over it when you’re creating your business plan!
2. The Bad And The Ugly
There are certain things about running your own business that are fun and exciting – your amazing product, your future success, being your own boss. But it’s not all a glamorous rise to the top. Let’s be real – there are a lot of aspects of running a business that just aren’t very exciting.
Taxes, insurance, zoning, regulations, finding vendors. Need another cup of coffee yet? It’s all too easy to shove these less-fun issues to the back burner and focus on how successful you’re going to be, but skipping over these parts of your business plan is going to seriously jeopardize that success.
It’s never as simple as: I have a great idea, I’m going to start making it and then selling it and then I’ll be good to go. Your business plan should include all of those steps, but it also needs to realistically address the potential hurdles and costs you’ll face. Are you selling a cosmetic product? There are FDA regulations to consider. Are you planning on manufacturing a product? You’ll need to make sure you’re looking at spaces that have the right zoning. Are you going to have to deal with sales or payroll taxes? Or other tax liabilities? Have you budgeted in the cost of an accountant or a lawyer?
You have to know the answers to those questions up front, or your business plan will be incomplete and probably overly optimistic. Those are real, unavoidable costs. Not only do you need to know about them so that your numbers are accurate, but you need to know about them so you can address them up front.
3. Number Crunching
Many budding entrepreneurs get excited about writing up the market analysis sections of their business plans. This is where you get to talk about how incredible your proposed product or service is going to be. This is the section where you talk about how your proposed product or service is going to stand out in your target market.
One (exceedingly common) mistake many excited entrepreneurs make at this part of the business plan is overestimating sales projections and fudging figures. Of course, this isn’t an intentional ethical breach — most entrepreneurs simply think their business is going to hit it out of the financial park.
Make the effort to check (and double check) your quantitative calculations. Do your homework ahead of time and make sure you have the best possible idea of the state of the market and what sort of sales you can expect. And include that information in your business plan – your lenders are going to want to see how you arrived at your projections. Overly rosy numbers probably won’t help you get a loan (since they’ll be looking for that evidence) and even if they do, you may find that you’re in over your head.
Besides, you want accurate numbers so that you can make sure your business is viable! You need those figures so that you can work out your costs, pricing, and other aspects of your budget and business plan. Again, you don’t want to end up over your head. It can be tough to tamp down your excitement and confidence in your product, but try to take a step back and evaluate those numbers as if someone else had brought them to you.
The Best Laid Plans
We’ve said it before and we’ll say it again: no business plan is perfect. And small mistakes generally won’t sink your whole operation. But these gaps are serious and you’ll need to fill them before you can move forward with confidence. For one, your lenders and investors will be looking for this information. For two, you need that information in order to successfully start up your business at all!
It’s not always easy to take an unbiased look at something you’re so invested in, so consider asking a friend or mentor to take a look at your plan and help you figure out what’s missing or what might need to be adjusted. You can even sit down with a lender and see what they have to say!
And remember, your business plan is going to change over time. That’s ok! As your business grows and progresses, just make sure you’re updating your plan – and filling in any gaps you find.
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