Business plans are often considered an essential tool to help set a new entrepreneur up for success. This document typically encompasses the vision for your company, including your mission statement, while also pinpointing your target audience, sales projections and growth goals.
If you're a new entrepreneur, developing a business plan can be intimidating and you might not know where to start.
You may also be prone to making some common errors that business owners tend to make on their first plan.
To that end, nine members of Young Entrepreneur Council each share one mistake new entrepreneurs often make in their business plans and what they should be doing instead.
Young Entrepreneur Council members discuss common business plan mistakes.
1. Making A Long-Winded Business Plan
After working at a larger company and starting my own company, I think that having a long, 50-plus page business plan is a mistake for startups because things change so quickly, and by the time you finish writing it, it is outdated. I have used the business model canvas from the Lean Startup methodology to create a one-page business plan, and leveraged it to create our mission and vision statements. We have never needed a business plan in our nine years of operations, and have just leveraged the business model canvas, revisiting it every two to three years to make sure that our strategy is still sound. I advise my clients to use this as well. I don't think I will ever write a long-winded business plan ever again. - Candice Lu, ONPREM SOLUTION PARTNERS
2. Underestimating User Acquisition
Entrepreneurs often underestimate user acquisition. With the immense competition for the consumer's attention today, it is more important (and difficult) than ever for their message to stand out. Part of that is a product that solves a burning pain point for the consumer that the consumer would be immediately drawn to, but another part is finding nonsaturated channels to reach their target consumers and building compounding loops within their product so that their users champion their product to other users. While it would be ideal if building a great product was all it took—"If you build it, they will come"—in my experience, this has not been the case. Great products need great distribution strategies to break through the noise and reach consumers who need what the entrepreneur is making. - Akshar Bonu, The Custom Movement
3. Striving To Create A 'Perfect Plan'
One mistake is that new entrepreneurs are trying to create the perfect business plan with everything all figured out. You will never start if you are trying to have everything figured out. Come up with a basic business plan and start it. No matter what, things are going to change as you figure it out along the way. For most things, you won't know until you start it and try things. So keep the plan basic and get started. Take notes and make adjustments along the way. - Lisa Collum, Top Score Writing
4. Failing To Research The Target Market
One business plan mistake that new entrepreneurs often make is failing to research their target market properly. They may have a great product or service, but if they don't know who their customers are, they'll have a hard time reaching them. It's important to have a clear understanding of who your potential customers are, their needs and how your product or service meets those needs. Without this knowledge, it's difficult to create an effective marketing strategy. New entrepreneurs should take the time to research their target market thoroughly. This involves identifying their needs and wants, understanding their buying habits and knowing where to find them. Only then can entrepreneurs develop an effective marketing plan that will help them reach their potential customers. - Tonika Bruce, Lead Nicely, Inc.
5. Forgetting Cash Flow
New entrepreneurs focus a lot on their profitability in their business plan, so they forget to focus on cash flow. Profitability often does not equal cash flow. Many profit-making businesses are not able to pay their bills because their funds are stuck in debt and stock. Thus, when making a business plan, it is important to look at the cash conversion cycle and how to reduce the cycle, as well as how to fund the cash flow shortfalls even when the company is profitable. Profitability ensures that the business will remain existent in the long term, but cash flow ensures that the business will remain existent in the short term as well. - Kripa Shroff, AK Multinational LLC
6. Thinking A Business Can’t Be Started Without A Formal Plan
Many entrepreneurs think they need a highly detailed, professional business plan before they can start their business. I would say that most of the business owners I know didn't sit down and formalize a plan before they launched. They just got after it and met a need in their market, learned lessons from the wins and the losses and refined their offering and operation each day. There are enough mental roadblocks that people obsess over and let stop them from ever starting, and the business plan shouldn't be one of them. That being said, it is good to have a business plan developed at some point in the business, which can be updated over time as the business grows. Chances are that the plan you start with will need to adapt and grow just like your business does. - Joel Mathew, Fortress Consulting
7. Misunderstanding The Plan's Purpose
Entrepreneurs' most significant mistake when writing a business plan is not understanding who they're writing it for. Not all entrepreneurs use their business plans to attract venture capital. If that's you, you don't need a comprehensive plan, but you do need a solid market analysis and financial picture. A business plan is a fluid document, not one set in stone. Business plans can be one page or even written on a napkin. If you're a company of one not seeking funding, it needs to: state the basic idea or concept; thoroughly examine the competition and product or service viability; detail a one-year marketing plan and a one-year budget and financial plan. You need to know your idea, the market and the money in as few pages as possible. If it's too long, you won't read or follow it. - Jared Weitz, United Capital Source Inc.
8. Underestimating The Competition
One of the most common mistakes new entrepreneurs make when making a business plan is underestimating, or outright failing to identify, their competition. This is especially prevalent for those with a truly unique product or service. New entrepreneurs can let their optimism and excitement for the idea cloud their vision when assessing the competition. If you think you have no competition, chances are you just don't recognize them. Just because the way you're addressing a problem is brand new doesn't mean the problem isn't already being addressed. Try to take a step back and focus less on businesses that seem comparable to yours, and instead think of alternative solutions to the problem your business will solve. - Bryce Welker, The CPA Exam Guy
9. Leaving Little Room To Pivot
One of the most fundamental mistakes entrepreneurs make when creating a business plan is failing to leave room to pivot and modify the plan as it is being executed. Flexibility is key. If your plan calls for marketing your product or service a certain way, and that strategy doesn't work, you need to change your approach or your business may fail. In addition, too often people fail to leave enough time to establish product-market fit (improving your product over time based on customer feedback). Imagine trying to sell something people don't want. That won't work. So, realize your business plan is a guide; it's meant to give you direction. It's not meant to be restrictive with your ability to learn and apply those lessons to increase the likelihood of a successful outcome. - Kristopher Brian Jones, LSEO.com
There are many situations in which an aspiring or established entrepreneur could benefit from a business partner. Maybe you're just starting out and believe your business idea would perform better with someone else by your side, or perhaps you've grown your company as much as you can on your own and need another person at the wheel with you to reach the next level.
While it's essential to know the qualities you're looking for in a business partner, it's just as important to know what to avoid. If you're searching for your ideal business partner, keep an eye out for these nine types of people. Here's why the experts of Young Entrepreneur Council say entrepreneurs should avoid them, as well as how these qualities will affect your relationship.
Young Entrepreneur Council members recommend not partnering with these kinds of people.
1. Someone Who Neglects Communication
Entrepreneurs should avoid partners who are not trying to become better communicators. Building anything takes years of hard work and, through it all, disagreement and conflict are unavoidable. In fact, some conflict may be desirable because one would hope your partner will challenge and push you to greater heights. Essential to resolving disagreement and conflict in a productive and healthy way that does not breed resentment and stunt the development of one's enterprise is open, transparent and compassionate communication. This is easier said than done as communicating effectively is an art tailored to the ever-changing needs and context of the other party. As such, we can always be better communicators, and we are better off working with those seeking to improve their communication. - Akshar Bonu, The Custom Movement
2. Someone Who Cuts Corners
When looking for a business partner, an entrepreneur should really avoid anyone who has shown any tendency to cut corners. This can mean not doing due diligence with organizing a previous business and paying taxes; it can mean not treating employees or customers with respect; and it can mean displaying an overall lack of ethical guiding principles in business. As an entrepreneur, you should be able to articulate these ethical guiding principles, and your potential partner needs to be all-in on them. If they are not, any future violation of trust can be fatal to the business and your personal relationship. - Kyle Michaud, Carolina Dozer
3. Someone Who Has No Desire To Learn
Learning is the root of innovation. The most successful businesspeople are those who are always learning. If your potential business partner has no desire or no time to continue learning, you’re better off walking away. If there’s one thing we learned during the pandemic, it was that those who were innovative found solutions to staying in business in the wake of upheaval to business as usual. People who are not lifelong learners tend to be more closed-minded. This trait can undermine a business relationship—especially if one partner wants to pivot or try new things. - Jared Weitz,United Capital Source Inc.
4. Someone Who Is Another Version Of Yourself
An entrepreneur should avoid looking for a business partner who is too similar to themself. They should look for someone who has the skills and expertise that they lack. This will help them avoid the trap of thinking that they can do everything themself and not need any help from others. - Kristin Kimberly Marquet, Marquet Media, LLC
5. Someone Who Lacks Motivation
Choosing your business partner isn't a decision that should be taken lightly. There are many red flags to look out for, with one of the biggest being a lack of motivation. They may have the skills you're looking for, but you're running a risk if they lack the motivation to get things done. For example, it will be very frustrating if you're working 12-hour days while they're only putting in three-hour days because they can't find the motivation to do the work. This isn't to say you need someone who's a workaholic, but they do need to have a sense of commitment. Otherwise, you'll be picking up the slack. This quality will affect the relationship negatively by putting unnecessary stress on your shoulders. - Nick Venditti, StitchGolf
6. Someone Who Isn't Aligned With Your Vision
An entrepreneur should avoid looking for a business partner who is not aligned with their vision. This will only lead to tension and conflict down the road. It's important to find someone who shares your values and who is excited about the same things you are. Otherwise, you'll just be dealing with more headaches and problems. Finding someone who's on the same journey also leads to long-term partnerships and even friendships. So, if you can find a partner who shares your vision, it's worth holding out for. - Syed Balkhi, WPBeginner
7. Someone Who Doesn't Ask Questions
Your business partner shouldn't be too agreeable and non-questioning as an individual. A great partnership is built on brainstorming ideas and questioning those ideas extensively to refine them. You should avoid finding a partner who can become an echo chamber of thoughts. This will restrict your growth. Find a partner who complements your work ethic and believes in you and your vision, but who at the same time is unafraid to point out errors and take charge to fix them. This quality, while seemingly contradictory, is actually an asset that goes on to strengthen your relationship. Avoid looking for someone who is too focused on pleasing you and agreeing with everything you say. That does not just affect how you work together, but also the future of your organization. - Candice Georgiadis, Digital Day
8. Someone Who Is Overly Confident
From my experience, a business partner who thinks they know it all is toxic not only for the partnership, but also for the company. I believe you need to be an open-minded individual with a global vision to innovate and attract talent. You cannot keep talent at your company, especially a startup, if the work environment is not constructive and supportive. - Alexandru Stan, Tekpon
9. Someone Who Is Untrustworthy
Finding a business partner is like finding a partner in life: There are a lot of things that might initially attract you to them—personality, skill set, network—but the quality that will keep the relationship successful is trust. Without true trust, you can build nothing. If you spend half your time following up or double-checking someone else's work to make sure you aren't getting burned or that the ball isn't dropped, then the math is simple—you are wasting 50% of your time and effort if the partnership does work out, and 100% of your time and effort if it doesn't. The final summation: it's a liability. Developing high skills is easy, but developing high character is hard. Character is the backbone of trust and, without it, you cannot have discipline, good leadership or effective collaboration.- Nic DeAngelo, We Buy Loans Fast
Networking is often hailed as a panacea for helping businesses expand their reach and grow profits. In fact, networking is a term that is as overused and misunderstood as marketing, with people thinking that success in these areas means needing to indiscriminately reach as many people as possible. As a result, people find networking overwhelming and are unsure how to really make it work for them. The secret to good networking, much like good marketing, is finding the right audience. Instead of casting a wide net and hoping to find the right connections, learning to network organically and in a targeted way can be far less work and much more beneficial to your business. When it comes to networking, less really is more.
Be open to engagement.
No matter how business-centric the concept of networking is, at the end of the day, networking is about connecting with people. Much like in our personal lives, if you are not open to meeting new people and interested in them as individuals, you will probably fail to find meaningful and mutually beneficial connections. Think about networking as a two-way street where you can offer and receive benefits through the connections you foster. Be open to the idea that your next connection could come via any source, even ones that, at first, do not appear as potential networking opportunities.
For example, you may have a major client with whom you have a great relationship, but you've never thought to ask them for new business leads or referrals. Or it could be that a small startup business begins following you on social media and as you engage with them, you realize there is great opportunity for collaboration. Be open to reframing your interactions with people as all being chances for establishing a reciprocal business relationship, and you may find that networking opportunities are actually everywhere.
Seek like-minded people.
Being open to a wide array of potential networking opportunities gives you a better chance of finding the right people to connect with. However, what you want to avoid is spreading yourself too thin and wasting your time trying to connect with everyone when not everyone is the right fit for collaboration. You want to focus on finding like-minded individuals and organizations that have similar values as well as business goals so your relationship has a better chance of being mutually beneficial in the long term.
To help focus yourself, take a look at your short- and long-term business goals as well as your plan on how to achieve them. Then look for businesses that are doing something similar, whether it is in the same business or in a crossover industry. They may be a more mature company with decades of experience or even a fresh startup with huge potential. But either way, focusing your networking efforts on those who have the same core values and approach to business as you do can help increase your chances of finding people to collaborate with who are passionate about the same things you are.
Identify what you have to offer.
We often think of networking from our own point of view. In other words, we look for the benefits we are seeking and forget to consider what we have to offer to the other party. In order for networking to work, both parties need to see a benefit. This is why it is important not only to identify what you would like to achieve through networking, but also potentially what you have to offer others as a partner or collaborator.
By sitting down and determining what your strengths and weaknesses are, you can be better positioned to identify what types of businesses or individuals are looking for what you are offering. This can not only help you further narrow down the types of individuals and businesses with whom you should be interacting and building relationships, but also weed out those you know won't be fruitful relationships to pursue. Knowing what you have to offer others can help you develop a more targeted approach to networking and help you focus on finding the best fit for networking partners.
Networking should not be an overwhelming exercise in trying to reach as many people as possible. Instead, it should be a very natural part of your regular business activities where the individuals and businesses with whom you regularly interact are all potential networking opportunities. Chances are that if your current business connections are functional and mutually beneficial, then it is a good indicator that you are of like mind and share the same values. This means that your current connections are far better conduits to finding other networking opportunities than approaching people cold.
By being aware of what you have to offer other businesses as partners, you can really hone in on who exactly will be worthwhile reaching out to, and what networking relationships will be the most mutually beneficial. Networking is a powerful tool and needn’t be a huge undertaking. Rather, it is best done on a daily basis, looking for all the opportunities that are already naturally at your disposal.
Today, it is easier than ever to launch your own e-commerce business. There are tools that take the once difficult, taxing and time-consuming process and make it painless, easy and affordable. However, with lower barriers to entry for anyone to launch their own digital storefront, the competition has become fiercer than ever—a megatrend that has touched almost every industry from mattresses to glasses to athletic wear.
With this in mind, while it may seem easy to launch your own e-commerce business, it is important to think about how to stand out so that you maximize your chances that your venture is ultimately successful. To help, here are three things to keep in mind when launching your own e-commerce business.
1. Find a niche that is underserved by the market.
While this may sound obvious, with e-commerce more competitive than ever, try to find a niche that isn’t competitive or has few, if any, competitors! Look for spaces and niches that are undeserved by existing players. This can make it far easier for you to succeed than entering a crowded market with incumbents who already have larger followings, more brand awareness and more years of experience than you do.
However, finding such an opportunity is easier said than done. It is often difficult to identify spaces that are undeserved because of how many people are looking for them and how lucrative they can be. One way to go about this discovery is to diligently study markets that interest you (after all, why would you potentially spend years working in markets that do not?) and identify emerging trends and shifting needs. One tool that is useful is Google Trends. It is particularly promising if you can find themes or topics that are rapidly growing in popularity as these could suggest new, emerging and potentially undeserved markets that could be viable for your e-commerce business.
2. If you’re entering a space with competitors, know what makes you different.
If you’re attempting to beat competitors, you need to know how you’ll be different and why you are superior. Is it because your product has better quality because of some innovation you have discovered in manufacturing? Do you have a novel business strategy or supply chain process that lets you offer the same product at a cheaper price or with a quicker turnaround?
It is important to make certain that your “difference” is material to the consumer and can move the needle in their purchasing decision. For example, if you offer a product that is cheaper than a competitor but the target consumers are not sensitive to price, they may stick with products they are familiar with. To avoid this trap, talk to your customers as often as possible to understand their needs and pain points.
It should be noted: One advantage of unseating an incumbent in an established market compared to targeting an undeserved, emerging market is that at least you know there exists a market for what you are building. When going after a new and undeserved market, it is harder to estimate the market size or be certain of the potential.
3. Understand the dynamics of the tools that you rely on to sell.
When launching your e-commerce business, you will likely use and rely on a variety of platforms and tools to reach consumers. These may be e-commerce marketplaces, social media platforms or search engines. For any platform you rely on, it is important to understand what it takes to succeed on that specific platform and optimize your products and strategies for it. At the same time, these platforms are constantly changing and evolving (just as new platforms are constantly emerging) so it is essential to be observant of new trends and be agile.
For example, if you reach consumers through Instagram, you may have had to change the type of content you make to showcase your work with the advent and success of Instagram Reels. On most marketplaces and search engines, having descriptive titles and tags allow your products to be more discoverable by consumers using the search features. Across all platforms, having beautiful photography and presentation that uniquely resonates with your target consumer is essential in today's visual era.
While this is certainly not an exhaustive list, these are three things to keep in mind when launching your e-commerce business. At no point in human history has it ever been easier to launch an e-commerce business, and so it comes as no surprise that millions of people have done so. At the same time, competition is also fiercer than it ever has been. So if you are taking the leap, these areas can be valuable to think through to maximize your chances of success.
Image credit: Getty
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