At Mitchams Chartered Accountants we can provide help with writing a business plan, based on our experience of working with business in the Somerset area. Here are six reasons why business plans fail – and how to make them succeed…
You may well have prepared a business plan some years ago to present to your bank manager. If you revisit that plan now, you will probably be surprised by how little relationship the position of your business now bears to that predicted in the plan. The reality is that most business plans fail. Here are some of the traps to avoid:
1. A dead document
A business plan that is created for a purpose and then discarded will always become obsolete quickly. Making your business plan a living document is essential if you don't want the whole process to be a failure. Only a regularly reviewed and updated plan can be the spur to look critically at your business on a recurring basis.
Most business plans are over-optimistic, especially as regards predicted sales, often massively overestimating the size of the market. Research your market thoroughly. Too many business plans include a SWOT analysis, but concentrate on the strengths and opportunities and ignore the threats and weaknesses.
3. Ignoring the competition
Business plans commonly assume that the competition will make no competitive response or indeed, will have no new initiatives of their own. Study your competitors and try to second-guess their plans. A living document will take into account their actions.
4. New or old?
Too many business plans depend on doing something new, when what is needed is to find a better way of doing what is being done now.
5. Ignoring risk
What are the risks attached to the plan? Think through these and the costs of failure as well as the rewards of success.
6. Profit or turnover?
If expansion is planned, it should result in increased profits, not just sales. Expansion requires finance, people and other resources. Can you get them?
Remember, a good business plan is as much about the process as the final document. Creating your plan will open your eyes to the realities of your business. Keeping it updated will help you stay on the right track. For help with developing your plan, call us.
Start-ups and established businesses in the Somerset area looking for help with writing a business plan should contact Mitchams Chartered Accountants for more help and advice.