Business News of 2014-08-20

Comment: Pitfalls to avoid in business planning

Factually, creating a new business requires that you plan to adequately cater for what the enterprise would venture into.
The justification for drawing up a plan to chart the courses of action of any entity is to help decide what would be happening in both the short and long term and such should be paramount on the owner’s business agenda.
In forecasting for the growth of the business, enough strategy, qualified personnel and adequate resources ought to be aligned according to the objective and missions set. The opportunity, therefore, to allow for investors to partake in the growth of the business and help from lenders who may accept and approve loan or credit facilities to catapult the enterprise to the heights envisaged may all come on the backdrop of a well-planned agenda for the business.
A lot more business owners, especially the start-ups, ignore to come up with how their businesses should be run. Well, there is no problem having it in the head but once the head cannot remember everything all the time, then plans to get the business started and running ought to exist on paper.
Those already familiar with plans also have some peculiar challenges. In trying to sell the business to the outside world, jargons, technical terms, unattainable financial goals, no clear paths for adequate cash flows, no real evidence of target market and, above all, inconsistent objectives or vision seem to flood the pages of the planned documents.
If the plan does not make room for the strengths of the enterprise, let alone making itself available to confront and safeguard against potential risks, weaknesses and pitfalls to avoid, then opportunities that may abound to advantageously set the business apart from its rival in a particular market would obviously be missing. Arguably, how can such a plan even ginger the morale of the owner(s) to carry on in the event of challenges?
Imperatively, a good business plan would become the road map that could offer both entrepreneurs and investors alike the chance to succeed at what they would engage in. It is through a well cut-out plan that will ensure the effective and efficient application of the knowledge, skills and limited resources available to achieve the objectives and targets of the business. So if the plan is the compass to direct activities to an expected end, then avoiding some specific business plan mistakes is very essential in attaining the visions of a particular business agenda.
Specific pitfalls to avoid
Plan is just for a single purpose Business owners mostly draw up business plans just with the single aim of seeking funds without adequate thought of having the plan to steer the affairs of the overall activities of the enterprise.
Solution: Let the plan spell out what the business will engage in and how that would be done. Emphasise on activity implementation and make known how specific objectives and targets are to be met.
One-man show document
If it should take just a single person to write the plan, for example, the Chief Executive Officer, then key managers would most likely refuse to share in the vision of the firm.
Solution: In drawing the plan, make sure to involve all and sundry that matter in the management of the enterprise. With this, you can count on each person’s commitment and efforts in achieving goals.
Over-ambitious plan
Most managers come up with business ideas that are so overstated with goals and targets. It becomes complex and difficult for everyone attaining such targets and therefore demoralises full participation and utilisation of the document.
Solution: Make business plans specific with timelines that meet reachable or attainable goals. Mandate managers to review progress made at specific times and encourage amendments and re-calibrations to attain goals.
Quick exhaustion
A lot more plans become outmoded because most are not updated to reflect the current exigencies of the time.
Solution: It is significantly important to update the business document regularly to reflect current trends in the market. This helps to balance efforts at meeting requirements and meeting standards in the industry.
Lack of focus
Entrepreneurs and most managers become disorganised when plans laid out in their business compass fail to materialise. They become enchanted with the negatives and these disillusion them in their quest to meet objectives.
Solution: Managers must make room for the “what ifs”. It is appropriate to safeguard activities, operations and processes laid down with much attention focused on achieving results, even if plans do not get results. This can be done with plan Bs in sight.
Writing the business plan may not be an easy job. It might require undertaking full research and enough analysis in the area of operation to carve what you want. It might also call for casting financial projections in the right direction, since that is the blood of every enterprise. So since writing the business plan might be much more involving and daunting, framers and owners of the plan ought to sieve through and avoid the pitfalls that make most plans poorly drafted and unworkable.
By: Ebo Crentsil jnr
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