Fatal flaws in your business plan


A business plan is a blueprint that guides aspiring entrepreneurs as they develop their new business plans. From 2008 to 2010, I taught a 20-week business plan writing course at a women’s business organization affiliated with SBA. We met three hours a week and the students wrote their plans weekly, guided the lessons.

When reviewing a business concept, unrealistic expectations or poor thinking can frustrate the plan. Excitement about this idea can impair one’s ability to see potential obstacles. Here are some scenarios that business people should avoid entering.

Unrealistic expectations

While it is sometimes true that using yourself as an ideal consumer is a clever idea, since you understand the value and availability of this product or service, you can misinterpret the size of the market and this traction. Which can be retrieved from the selected group. True believer

Insufficient information

When you research and verify the number of potential customers when you have the money and purpose to buy, confirm the need for your product or service.

In addition, make sure you understand the buying process. Who sells green lights? What is the price range of the sweet spot? After all, where do potential customers get these products or services now?

Access to users

Consumer access is everything and some industries or target customers seem insurmountable. You can identify the right customers, understand how your products or services fit their needs, and know the price and delivery method. But if potential customers don’t trust you to work with them because you lack the credibility of a reliable source, you will starve to death.

Property cash flow

Generally, businesses will not achieve the desired gross sales nor will they show net profit in the first year of operations. Businesses that require particularly high costs will require particularly long ramping periods. The business plan must recognize the possibility of negative cash flow and show how fixed and variable expenses will be met during this time. One has to know how the inventory will be financed, the salary will be received and the office rent will be paid.

When writing your business plan, conservative financial estimates are strongly advised. Acquiring a customer may take longer than expected and may initially reduce the size of their purchase. Furthermore, if it is possible that a company does not pay on time, a business will be profitable on paper and still suffer from cash flow problems.

Reduce initial costs

It is important to make a reasonable estimate of how much it will cost to run the project. You must be prepared to cover all the necessary permits, equipment, inventory and staff costs to do business. If you plan to hire employees, you need to take good care of the minimum staffing needs (you can get the most services after increasing the revenue).

“Magical thinking” business model

The business model explains how your plan will work. A well-thought-out dialogue between the marketing, financial and operations processes will promote and sustain profits and you need to know how to do it. The business model describes the basic functions of a venture.

Similarly, the value of your product or service should be suggested. Aggregate marketing strategies and selected strategies and resources that will promote value proposition — intellectual property, patent rights, key relationships or capital — will be accounted for. Sales distribution channels will be detailed.

Go to Plan B. (2009), through Randy Commissar and John Milnez, outlines the key components of a business model and advises business plan writers to subdivide their model into sub-headings:

  • Revenue model, to describe what you will sell, your marketing plan and how you expect to generate revenue

  • Operating model, for details on where you will do business and how your day-to-day operations will go

  • Working capital model, meaning business cash flow requirements. Understanding cash flow helps you know when money will be available to cover expenses such as rent and payroll (this is separate from revenue). A business can generate reasonable income (sales) and still suffers from cash flow problems.

Your business model will keep you organized and your priorities realistic. Issues such as quality control, receivable account collection, inventory management, and identification of strategic partners, for example, will far outweigh your Facebook followers. Best wishes to you and your new business!

Thanks for reading


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