Seven Common Business Plan Mistakes
Written by David Hilton.
We’ve talked previously about the importance of a business plan, whether you’re a startup or have been in business for thirty years. Below are seven common mistakes that business owners make while creating their plan:
1. Poorly written. While your business plan is not supposed to be a work of classic literature, it’s important that it be grammatically correct and free of spelling errors. A business plan full of typos sends a very bad message about your attention to detail. If you can’t get your business plan right, why would a potential investor think you can manage the details of your operation?
2. Incomplete. Don’t leave anything out of your plan. Essential elements of every business plan include a discussion of your target customers, your goods or services, your operations, your marketing and sales, your management team, and your competition. A description of your market and the inclusion of detailed financial figures and projections are essential as well. Neglecting to address any of these elements leaves a major hole in your plan.
3. Too vague—or too detailed. It’s important to be specific when it comes to market analysis, financial projections, your marketing plan, and other aspects of the plan. If the reader is left with key questions, you need to add details to the plan. On the other hand, it’s important not to get bogged down in technical details. An overview of your products and services is generally sufficient.
4. Unrealistic expectations. It can be tempting to rely on rosy projections concerning revenue, demand, and expenses—but doing so is a mistake. If your plan doesn’t appear feasible when the projections are realistic, you need to change your business model. In addition, unrealistic projections will destroy your credibility and call the rest of your plan into question.
5. Not written for the right audience. There are a variety of uses for a business plan. You’ll need it to secure financing from banks and investors, you’ll use it for long-term planning, and you’ll use it to communicate your vision to your management team. Your plan should not be one-size-fits-all. Create a version for banks, investors, managers, and for personal reflection. Tailor each version to be most helpful to the specific audience.
6. Pricing mistakes. Startup companies, in particular, often make the mistake of entering a market while charging far too little for their products and services. While low prices can be a good method for securing business quickly, they also define the quality of your products and services. Give careful thought to price levels before entering a market—because it’s not easy to escape a perception of your business as “low quality.”
7. Paying somebody else to write it. Writing a business plan takes time and effort. Many entrepreneurs and small business owners are tempted to delegate it to an employee or an outside consultant. Either decision is a mistake for two major reasons. One, because writing your business plan will force you to adopt a healthy long-term view of your company. And two, because you can’t afford mistakes in a plan that you’ll be presenting to potential investors, partners, or lenders. Bite the bullet and invest the time and energy—you won’t regret it.
A Business Plan format that I recommend as a starting place for most business is The One Page Business Plan.
Four Mistakes That Will Kill Your Conversion Rate
Written by David Hilton.
You spend valuable time and money generating leads for your business. But once you identify a lead, are you taking full advantage of it? Below are four common mistakes that I’ve come across. Each of these will have a negative impact on your conversion rate— so if you think any of these apply to you and your company, get them cleaned up as quickly as you can.
1. Poor website design. What’s the most important aspect of any website designed to generate sales? Impressive pictures and videos, engaging content, or fancy bells and whistles? The answer is none of the above. Nothing is more important than usability. That means your site needs to be clear, easily navigated, user friendly, and fast. You need to identify the purpose of your website, determine the information that viewers need to be presented with, and then work to streamline the process. Most websites don’t need to be graphically impressive—user friendliness needs to trump everything else. So ask yourself these questions: Will my target market understand the content of my site? Will they be able to navigate it easily? Will it be easy for them to use? If the answer to any of these questions is ‘no,’ you need to get to work. Otherwise, you’re wasting the precious traffic you manage to drive to your site. A good book on this subject is Don’t Make Me Think by Steve Krug.
2. Failure to follow up. When you find out about a lead, whether through your website, email campaign, or some other means, it’s critical to get back in touch with them rapidly. Often potential clients or customers will be comparing you and several competitors meaning that if you don’t act quickly, you’ll lose the client. This sounds obvious, but it’s amazing how often following up on a lead gets put on the back burner during a busy day. Develop a system to ensure that you are getting in touch with prospects in a timely manner—otherwise, you’ are wasting your marketing efforts.
3. Failure to identify true customer needs. Customers often inquire about a product or a service that doesn’t really solve their problem. Take the time to understand their situation and their needs, and help them identify the best solution. Apple stores generally do this very well. By taking time to understand the customer, the customer ofter will purchase a different product than originally intended, but that better meets their need. This is beneficial because, in addition to feeling great about their purchase, they’re more likely to come back to you in the future.
4. Attracting the wrong leads. Who is your ideal customer? Are you driving those people to your website and targeting them with your marketing campaigns? It’s easy to set your marketing sights too wide—which results in spending money on customers who aren’t likely to become your customer or client. Make sure that you’re focused on the core of your market, so that you have the best chance of converting them from a prospect into a loyal client.
Learning from Bill Belichick
Written by David Hilton.
Bill Belichick, the head coach of the New England Patriots, is considered by many fans, players, and sports media figures to be the best coach in the NFL today. In addition to winning three Super Bowls in the last decade, and appearing in a fourth, Belichick has also been named the NFL coach of the year three times, in 2003, 2007 and 2010.
The success of the Patriots under his leadership is particularly impressive in the NFL, as opposed to other major sports, because the league is dedicated to the concept of parity. There are mechanisms in place, including the structure of the draft and the salary cap, that make it very difficult for teams to sustain greatness over many years. This matters to business owners because many of the principles of Belichick’s management style are applicable to the world of business. Here is a brief summary:
1. Always looking to improve. Belichick is never satisfied with his roster. He’s constantly looking to improve at every position, no matter how good the current player may be. The constant threat of competition motivates players to perform at the highest level, and the amount of talent on the roster ensures that if a player goes down due to injury, another player is ready to step up and take over.
2. Exploiting weaknesses and leveraging strengths. Belichick is always looking for mismatches. Unlike many NFL teams, who run the same basic offensive and defensive packages from game to game, Belichick’s Patriots will dramatically alter their philosophy from game to game in order to best exploit mismatches. If he sees that the next opponent has a weak run defense, he’ll switch away from the usual pass-happy offense and focus on running the ball. Conversely, if he’s aware of weaknesses on his own team, Belichick and his staff will design a scheme to compensate for the weaknesses.
3. Emphasizing preparedness. Belichick and his staff are exceptionally well prepared for each game. While all NFL teams spend significant time studying their opponents, the staff of the Patriots is known to be particularly thorough when it comes to studying the tendencies of opponents and organizing the data into actionable data.
Is your business dominating the competition? If not, maybe it’s time to channel your inner Bill Belichick. Honestly evaluate your organization—is there room for improvement anywhere? What about your strengths—are you leveraging them to the best of your ability, while taking advantage of weaknesses in your competition? And are you doing your homework when it comes to strategic planning and market awareness? Building a great organization requires hard work, vision, and determination—whether the organization is an NFL franchise or your business.
