Where Business Plans go wrong – common errors

Where business plans go wrong

Here at Small Business Plans (SBP), we have helped hundreds of large, medium, small and start-up companies to plan over the past 20 years. And we have further coached thousands of managers, entrepreneurs, and leaders with experience levels ranging from zero to highly skilled. Without exception, none of these people have been comfortable thinking in the way that the Business Planning process makes you think. The benefit of a Business Plan is that it takes you through a process of thinking steps to make sure that you minimise risk, demonstrate to yourself and others that you will make money, find a gap in the market, and make sure your product is sufficiently differentiated.  And a plan communicates all of this clearly. 

Even a business genius would not find it simple to do that. Therefore, people use with great success: templates, processes, coaching courses, podcasts, and blogs (such as this one 😊) to help them think on different sides of their brain, to tackle this challenging but rewarding process. 

And at times, for all the right reasons, it goes wrong. This blog is all about what goes wrong, and  how to make sure this doesn’t happen to you. 

As always, please don’t hesitate to contact SBP by clicking here [Barbie to add] and we can help.

The Over-Thinker. He/she has spent five years producing a 200-page Business Plan, and now wants to share it with some of his mates to get their feedback. On the surface, you’d think that overthinking was a good idea. Many investors, however, will look for results, success, or traction in a Business Plan. Likewise, if you already have the money, and you spent two years writing a Plan, you’ve robbed yourself of the opportunity to generate revenue in those two years, test ideas and learn, get real market research in real time from real customers and so on.  If you do want to go to town on your Plan, please keep in mind that you are displacing all those other things above that you could instead be doing:

  • Talking to potential customers
  • Generating revenue
  • Learning how to improve your product, and 
  • Proving to investors that you’ve got ‘get up and go’.

The Short Cutter. It’s human nature to try and find the quickest way from A to B. And why not? There are several ways to do a Business Plan very fast and short (such as Strategic Canvass or Plan on a Page) that really are terrific and can work very well in certain situations. As soon as you present a one page plan, if you got it right and you did a good job, you will be asked for a lot more evidence in the form of a… you guessed it… Business Plan. So in some situations, if the idea is not self-evidently brilliant or you believe you haven’t identified all the opportunities, the size of the prize, the gap in the market, the optimum price, the competitors that you’ll take your market share from… you may not want to just rely on a Canvass or One Page Plan. 

The ‘I’m Very Successful and I’ve Never Written a Plan’ Person. They have written a Plan; they just haven’t articulated it as such. Many studies have been done of people like Bill Gates and Steve Jobs. There is plenty of evidence to suggest that they went through the Business Planning process and ticked all the boxes that we mention above. There may not have been one document written down at one point in time, but there were certainly a lot of planning processes going on.  

The ‘Do It For Me’ Person. This person is too busy to plan and does not want to get involved in the process.  This is perhaps the only dangerous personality type or behaviour when it comes to planning. This is because, even if you buy a Business Plan from someone else, and they carefully go through all the steps to articulate the processes clearly in a document for you, one question like “so how did you arrive at your Year One sales forecast?” will derail you. The frequent belief that you can download a Business Plan for, say, a café (because you’re opening a café), completely misses the point  – your café will not be in the same area, not have the same consumers, not have the same nearby businesses, you have different strengths and weaknesses from the person running that café, their coffee is $3.80 and yours is $4.40, and so on. So your P&L, Balance Sheet and Cash Flow are all, therefore, unique.  They may have run their café before Covid and you’re running it after Covid…and so on. 

It’s possible to buy a template that’s already filled in for a Business Plan, but this would be pointless in any event. It’s all about the process, not the document. But if you hire someone, they must be patient and approachable and write clearly to help you understand your business.