Top 10 Business Plan Myths of Solo Entrepreneurs

A recent study of 29,000 business startups noted that 26,000 of them failed. Of those failures, 67% had no written business plan. Think that’s a coincidence?

Here’s the top 10 myths Solo Entrepreneurs often have about business plans-usually, the reasons why they don’t have one. De-bunk the myths, and see how having a business plan for your solo business, can actually be easy and fun–and can jumpstart your success!

1. Myth: I don’t need a business plan–it’s just me!

Starting a business without a plan is like taking a trip in a foreign country without a map. You might have a lot of fun along the way, and meet a lot of friends, but you are likely to end up at a very different place than you originally set out for-and you might have to phone home for funds for your return ticket.

Solo Entrepreneur Reality: Successful Solo Entrepreneurs know that the exercise of creating a plan for their business really helps them think through all the critical aspects of running a business, make better business decisions, and get to profitability sooner.

2. Myth: I have to buy business plan software before I can start.

Business plan software comes in many shapes and sizes, and prices. Many are more geared at small and growing businesses with employees.

Solo Entrepreneur Reality: Software can be helpful-but it’s not required. Software is more likely to help if you have a more traditional type business, like a restaurant or a typical consulting business.

3. Myth: I need to hire a consultant to write my business plan.

Consultants are expensive and don’t really know as much about your business as you do!

Solo Entrepreneur Reality: Your business IS you-and you need to be intimately involved with the creation of your business plan. A better strategy, if you think you need professional help, is to hire a coach or mentor-someone who can guide you in what you need to do, not do it for you.

4. Myth: The business plan templates I’ve seen have all these complex-sounding sections to them-I guess I need all those?

The only time you need to follow a specific outline is if you are looking for funding.

Solo Entrepreneur Reality: Your business plan needs to answer ten basic questions-that’s it! Don’t make things more complicated than necessary.

5. Myth: My business plan needs to be perfect before I can start my business.

If you wait for everything to be perfectly detailed, you may never start.

Solo Entrepreneur Reality: If you have at least a first draft that answers those ten basic questions, you are ready to launch your business! Make your business plan a living, evolving document. In the startup stages, review and update your plan every 2-3 months. As you grow and stabilize, you can slow down the review cycle to every 6-12 months. All business plans should be reviewed and updated at least once a year.

6. Myth: I have to do everything I say I’m going to do in my business plan, or I’m a failure.

Many Solo Entrepreneurs never start because of this myth-which leaves them feeling that the success of their future business suddenly rides on each stroke of the pen or click of the keyboard!

Solo Entrepreneur Reality: Think of your business plan as a roadmap for a trip. Expect to take some detours for road construction. Be flexible enough to take some exciting, unplanned side trips. And don’t be surprised if instead of visiting Mount Rushmore, you decide to go to Yellowstone, if that turns out to meet your vacation goals better!

7. Myth: A good business plan has a nice cover, is at least 40 pages long, must be typed and double-spaced…

Business plans intended for investors, such as a bank or venture capitalist, must meet certain requirements that such investors expect.

Solo Entrepreneur Reality: As a Solo Entrepreneur, your business plan need only satisfy YOU. It might be scribbled on a napkin, on stickie notes on your wall, or consist of a collage of pictures and captions. It might be all in one document or scattered among several mediums. As long as you know it in your head and heart without having to look at it, and and it is easily accessible to you when you have doubts, that’s all that is necessary.

8. Myth: I don’t need a loan-so I don’t need a business plan.

YOU are the investor in your business-and would you invest in the stock of some company without seeing a prospectus?

Solo Entrepreneur Reality: Seeing your plan in black and white (or color, if you prefer!), can give a whole new view on the financial viability of your business. If “doing the numbers” seems overwhelming, remember you don’t need fancy spreadsheets. Just lay out a budget that shows where all the money is coming from (and going), and have an accountant review it for additional perspective.

9. Myth: My business plan is in my head-that’s good enough.

I don’t know about you, but I sometimes can’t remember what I planned yesterday to do tomorrow, if I don’t write it down!

Solo Entrepreneur Reality: There is a real power in writing down your plans. Some schools of thought advocate that the act of writing a plan down triggers our subconscious to start working on how to manifest that plan. And, of course, it’s a lot easier to remember when you have it in front of you. And a lot easier to share and get feedback from your non-mind reading supporters.

10. Myth: Friends and family are the best sources of feedback and advice on my business plan.

If your brother is an accountant and your best friend is a market research expert, then this might be true.

Solo Entrepreneur Reality: As well meaning as our friends and family can often be, they just aren’t the best way to get honest, objective guidance. Instead, seek out folks that have specific knowledge that will help you, are willing to be candid with you, and that have a genuine interest in helping you succeed. A business coach is one resource to consider!

4 Killer Business Planning Problems – And How to Neutralise Them

Business planning is one of the most critical steps to online or offline business success. It is so much easier to work from a blueprint, when running a business, than it is to work without direction. When you work without any guidance or sense of direction, you get blown with the wind. You get lost in a sea of problems.

When you have a good business plan you can follow it to achieve your life’s dreams. You can modify it as you work from it so that your plan remains relevant at all times. A business plan is the route map to your wildest financial aspirations. All the more reason why you should pay attention to its preparation.

A business plan is a strategic document that manifests the principle of thinking before acting. As a strategic document it details the long term plan to be followed, covering a period of 3-5 years. A business plan is also a tactical document in that it is best constructed at a detailed level that makes the forecasts reasonably accurate over the first year.

Many obstacles stand in the way of constructing a business plan, and this article discusses four of them… being unsure of how to implement a plan, failure to recognise the need for regular updates, ignorance of product planning, and ignorance of marketing planning. The article also proposes solutions to these and other business planning problems.

IMPLEMENTATION

What is implementation? Why must we implement a business plan? How do we implement it? Implementation is the process of acting on a plan. We follow it and apply its findings, while watching the business environment for any significant changes. When there are changes we take them into account by modifying the plan. If the changes are minor we make only tactical changes. If they are major we make strategic changes.

It is one thing to plan, but it is a completely different matter implementing the plan to achieve the desired results. To succeed we must be disciplined while remaining flexible. We must also be objective in our assessments so that we can accurately monitor progress, and we must be ruthless in correcting deviant behaviour. Sometimes this means sacking incompetent personnel and hiring better ones. We shall deal with other implementation issues later.

UPDATES

Why must we update a business plan? A plan must always be up-to-date if it is to remain relevant. You don’t want to follow an outdated plan or it will lead your business astray. An updated plan is one that responds to environmental changes by listening for such changes and using them to adjust its methods.

The necessity to keep a plan relevant means that we must conduct business planning every year. The plan must cover a 3-5 year period in order to incorporate strategic elements. But what are the details behind updating a business plan? We shall discuss this later.

PRODUCT PLAN

A business sells products to make money. As such it must engage in product development or acquisition. What is a product plan? Why do we need a product plan? How do we develop a product plan? How do we implement a product plan? We shall deal with these questions soon.

MARKETING PLAN

Marketing is about bringing customers to your business. Without customers your business can’t survive. You can’t get customers if they don’t like your products or services. Therefore product planning must be driven by marketing considerations.

First you determine what your potential customers want and then you give it to them in the form of products or services. But what is a marketing plan? Why do we need a marketing plan? And how do we develop a marketing plan? These questions will be addressed soon.

Now let us turn to the answers to this and other questions mentioned above… Unfortunately, we do not have enough space in this article to address the aforementioned questions. So we have prepared a special page with all the answers you need. Before directing you to that page let us first summarise what we have done here.

FINAL REMARKS

This article has discussed a number of key problems that you will face when you try to construct a business plan. The problems include…

1. Your lack of skill in implementing a business plan.

2. Your failure to recognise the need for regular updates.

3. Your ignorance of product planning.

4. You ignorance of marketing planning.

The article also points at the solutions you must undertake to resolve these problems. The link to these solutions is provided below.

Business Planning and Business Plans – What’s the Big Deal?

Whether you are a veteran business owner, have recently begun your own venture, or are still in the dreaming stages, you have invariably spent many hours thinking about and envisioning your organization. While it is always exciting to try to realize your dream in your mind and to project that image into your future, the realization that barriers, stumbling blocks, and necessary “to-do’s” exist. These subjects range from broad to very specific, and can include questions such as:

  • Who is my ideal client?
  • What would be a good name for my organization?
  • What is my unique selling proposition (USP)?
  • How will I balance my work life with my personal life?
  • How big do I want this business to be?
  • Do I have the necessary resources? If not, where can I get them? If so, how do I most effectively utilize them?

The list goes on for pages and pages; indeed, there are numerous resources that outline these very details, and putting some time into exploring these ideas is always a smart move. For some specific ideas, check out some of the free articles on offer by MEG Enterprises.

The reasoning behind developing a business plan for businesses of all sizes can vary, but business plans are most often created for two primary reasons: as a management & planning tool, and to acquire funding for operational business needs.

Management & Planning Tool

If you are like many other small business owners, you are not only the owner of the company, you are likely also actively involved in the day-to-day operations as the President/CEO, the marketing department, the IT department, the HR department…the list goes on and on! One of the most important things to remember in trying to bring all of this together into a cohesive and efficient package is that planning is vital!

Many small businesses take a “fly by the seat of your pants” approach to operating their businesses. For example, let’s say that an excellent business opportunity arose for you, an opportunity that would net your business $5,000 over the next 3 months. However, in order to take advantage of this opportunity, you need an initial cash outlay of $1,000. Do you have the resources necessary to take advantage of this opportunity? If your answer is no, you may have been able to easily accomplish this goal by planning for such expenses in advance through a business plan. Even if having cash at the ready is not a viable alternative for you, you may have planned to have a line of credit available for such opportunities, knowing that in your field these opportunities do arise from time to time.

In a more broad sense, business planning helps businesses of all sizes to deal with the day-to-day needs of the organization by forcing the owner to weed through the operations of a typical work day. Business planning will assist you in understanding how to effectively market your business, how to understand and plan for financial stability both now and in the future, how to carry out your daily operations with a necessary level of routine, and so forth. Moreover, while unpredictable issues will certainly always arise, effective business planning will not only help you to navigate the predictable operations, but will also take these unpredictable situations into account. This will help you to deal with these issues with a level of comfort and ease, knowing that you have thought through and planned for such events.

In essence, here is a great way to think of superior business planning. Imagine you are taking a road trip from California to New York. No planning (“flying by the seat of your pants”) would involve you getting in the car and driving “East” on every freeway you come across. Adequate planning would involve mapping out your course, planning where to stay overnight, where to eat, sights to see, and so forth. This is a much better plan indeed. However, a superior plan would take all of these ideas to the next level by planning for “what if”: what will I do if I get a flat tire, if I run out of gas, if someone gets sick, or if I lose my wallet? You can see how the superior plan is clearly the best in most situations in that it allows for flexibility, plans for the expected and the unexpected, and allows you to spend more time enjoying the trip, knowing that you have all of your bases covered.

HELP…I Need Cash! (AKA Creating a Business Plan to Acquire Funding)

Another reason to create a business plan is to acquire funding. In today’s struggling economy, having access to cash as a small business is vital. In developing plans for this reason, a much more specific approach is taken. Here, the plan is created with a specific reader in mind: the lender. Whether seeking funds from a bank, an angel investor, or so forth, knowing your audience is vital.

How do you create an effective business plan in this situation? Well, simply stated, place yourself in the shoes of the person lending the money. What would you as the lender want to read in a plan? First and foremost, these individuals want to see that you have demonstrated the ability to repay the loan with the required level of return on investment (ROI) and within the required time frame.

These areas require that you present a strong case for your proposed financial expectations, grounded firmly in the supporting information of your plan, including marketing, market analysis, business operations, and so forth. Having confidence in your business and in yourself will assist you in demonstrating the potential for your company and in being able to deliver what your investor is looking for. Doing your due diligence and knowing the facts surrounding your business and your market will prove to be of great benefit when selling your business case, both in writing and verbally, to the lender you are seeking funding from.

So, How Do I Create A Business Plan? What Does It All Come Down To?

Although the term “business plan” conjures many negative images in the eyes of some business owners, taking a step-by-step approach will prove that creating a business plan is much less daunting than one might imagine. Although no two plans are exactly the same (the necessary details of the plan can vary between companies), the contents of a typical business plan include the following topics:

  • Executive Summary – Sell your business to your reader!
  • Business Overview – Giving a general summary of the business.
  • Market & Competitive Analysis – What environment are you competing in?
  • Marketing & Sales Strategy – How will you “win” in your market?
  • Organization Plan – How is your organization structured?
  • Financial Projections – Current status and future outlook.
  • Funding Sought (if required)
  • Key Milestones – What are your specific & achievable goals?
  • Critical Risks – What keeps you awake at night?
  • Appendix/Attachments

Does this look like a lot to you? Well, believe me, as you truly delve into the details of the plan and your business, you will be wondering why there isn’t more room for details!

The most important aspect of business planning (the “What does it all come down to?” part), however, is spending the time to do your research (“due diligence”) and critically thinking about these various aspects of your business. Of course, it is impossible to anticipate every detail simply by spending time thinking and writing; it is for this reason that plans are referred to and viewed as “dynamic”. However, the more issues and scenarios you are able to come up with ahead of time, the more prepared you will be to handle these as they arise.

So, in the end, I encourage you to realign whatever preconceived notions you may have of the business planning process and view it not as a daunting task or a necessary evil of running a successful business. Instead, view it as yet another opportunity, the chance to help make your dreams into a reality by mapping out the needs of your business, your customers, your employees, your suppliers, your community…and yourself!