Whether it’s the excitement of being your own boss, the glamour of being able to work on something you are passionate about, or perhaps the possibility of being highly successful in your new venture, starting a business can be an exhilarating time in life.
However, eagerness and enthusiasm can lead new business owners to overlook important factors in their business plans. To prevent some of the most common mistakes from happening, this article will review the most common elements that are missing from first-time business owners’ business plans.
Read on to learn how to avoid innocent, frequently made mistakes and ensure your new business can move forward with a strong foundation.
The 5 Most Overlooked Elements of Business Plans
When you’re just starting out, it’s important to plan ahead. While it’s fun to focus on the positives that can come from your new business venture, you also need a system for when things may not be so successful. Having a clear picture of all the unexpected factors that may come into play will give you a better chance of success. Here are a few things to consider:
1. Licenses, Permits & Dues
Whether or not you require licensing or permits depends on the type of business you will be running. When you register your small business, it will be important to choose a business structure that will offer you the most advantages.
Some of the most common small business expenses are:
- Business license fees
- Processing fees for loans
- Lease agreements for office space
- Patent registrations
- Insurance policies
- Payment processing fees
- Membership dues for local organizations such as a chamber of commerce. Professional organizations also charge dues to members
It’s important for you to consider these fees and expenses now before you start conducting real business. For example, when acquiring a merchant account for payment processing, paymentcloudinc.com recommends that you review your merchant agreement so you’re aware of the monthly and recurring fees.
2. Customer Churn
In a perfect world, all customers would be loyal their entire lives, but that is simply not the case. Customer churn is the percentage of customers that stop buying your company’s services/products in a specific time frame.
It is important to keep your churn numbers low, as it costs much more to attract new customers than to retain them. Returning customers are likely to spend more on your company’s services/products than new ones. This greatly affects your bottom line, which is why you should keep constant tabs on your churn rate.
3. The Importance of a Hiring Plan
In many cases, business owners don’t succeed due to burnout. As humans, we seek to learn and acquire knowledge, but we can’t do it all at the highest level. Others may excel in an area that may be your weakness. The right team can help your business expand much broader and faster than doing everything on your own.
Hiring staff and finding business services to partner with and rely on can increase efficiency and help you make substantial gains. For example, a merchant service provider can process your electronic payments and provide exceptional customer support for a great price. This saves an enormous amount of time, allowing you to focus on other aspects of the business that require more attention. It is important to have a team you can rely on, and the best way to ensure this will happen is to develop a hiring plan based on various sales milestones in the company. As your business grows, so will the number of team members.
4. The Hurdles of Obtaining Capital
There will come a point when you may need to find a way to obtain more capital. This may be to take advantage of a great opportunity or take your business to the next level. It’s time to find out how to get a business loan and look into alternative funding solutions based on your credit history and company standing.
Because a new business does not often have enough history for a regular business term loan, it can be very hard to get approval. Financial institutions have a certain amount of risk they are willing to take on, and first-time business owners are often considered high risk.
It’s important to do your research on what resources can be used if the need for capital arises in the future, and which options are viable for you. All funding sources come with fees and service charges, so make sure to do your homework. Funding research should be a focal point of your business plan so investors know you’re practical and focused on scaling and growth. In addition, having a good idea of potential funding sources will make it easier to acquire capital before you need it. The worst mistake a new business owner can make is failing to plan for their financial future. Part of this includes assuming money will become available as soon as you need it, instead of putting in the work to secure it in advance.
5. Having a Substantial Marketing Budget
Do not underestimate the cost of reaching your target audience! Google Ads, Social Media campaigns, and just about all advertising channels online continue to increase in costs year after year.
Some business owners feel that simply having a website and creating a few social media accounts is enough, but these platforms must be marketed heavily on the appropriate channels. Perform a target market analysis to find out who your best customers are so you can sell directly to them. Consistency is key, and keeping your brand top-of-mind will lead to higher conversion rates.
Whether it is investing in a professional newsletter service, drip-campaign service, or pay-per-click service, these ongoing marketing solutions make up a significant portion of business expenses.
More often than not, the marketing budget is set too low as a new business is launched, resulting in low product/service awareness. Obtaining new customers is expensive, and target market research should be factored in from the very beginning.
Set Yourself Up for Success
Learn from other business owners’ mistakes and take the time to think about every aspect of your business plan before you launch your new venture. Ask yourself questions to prepare for each stage of planning. Where can you bolster your strategies should issues arise? What happens if your funding pulls out? Make sure to start thinking about what kind of team you will require as your business scales and who to partner with. It will be essential to work with a company that understands you and provides services in areas you may need help with.
Starting a business is a thrilling experience whether it be your first or fortieth business. Keep these tips in mind but realize that no one gets it right the first time. Running a successful business takes time and commitment but is achievable with a little planning on your end.