Top 10 Business Plan Myths of Solo Entrepreneurs

Image via Wikipedia

Don't let these stop you from having a business plan for success!

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 business plan, 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: Business plan 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 an expensive way to have your business plan written.

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!

Copyright 2004, Terri Zwierzynski - Accel Innovation, Inc.

Terri Zwierzynski is a self-employed business strategist and marketing consultant to solo entrepreneurs, and a grassroots promoter of the solo entrepreneur lifestyle. She runs Solo-E.com, the resource website for the self-employed which attracts thousands of solo home business owners monthly from over 100 countries on six continents (and was recently named a finalist for "Website of the Year" in the 4th Annual Stevie? Awards for Women in Business). Terri is also the co-author of 136 Ways To Market Your Small or Solo Business.

Find more articles about Business Planning at Solo-E.com, plus get a copy of our new ebook, "25 Surefire Ways to Capture More Clients, Get More Done in Less Time, and Make More Money -- in 90 Days or Less."

Related articles

• How Business Planning Leads to Better Management (entrepreneur.com)
• The Best Laid Plans Often Go Awry. Are You Prepared? (blogs.constantcontact.com)

Why Small Businesses Fail (or Fail to Thrive)

Tammy, a skilled and gifted horticulturist, called me to discuss what she needed to know to start her own florist and landscaping business. She had been in the horticulture industry for 10 years and was incredibly skilled at working with flowers and plants - one of the best. She also had great design skills, as well as good customer service skills. But she had little business management experience and less self-employment experience.

Discovering why small businesses fail was a smart research project for her, as it helped her uncover her own weaknesses and begin to build up some strengths before she invested in becoming self-employed. It's no secret that a large majority of small businesses fail in the first five years. The question is: Why do they fail and what can I do to prevent problems in my own business?

As we talked, we reviewed some of the common reasons why small businesses fail. Here are 14 top reasons, which might help you to determine why your business isn't growing and thriving. Some of them are related to learnable business skills; others relate to personal attitudes, habits, or self-sabotaging belief, which are not so easy to change, except through coaching or other self-development work.

1. Mistaking a business for a hobby: Just because you love something doesn't mean you should convert it into a business. Too often businesses fail because the owner feels their passion is shared by others. Research your business idea and make sure it's viable.

2. Poor planning: Yes, you must have a business plan. It can be a simple three-page plan or a huge 40-page plan. The point is that you've looked at all the aspects of your business and are prepared to handle problems when they arise. Your business plan helps you to focus on your goals and your vision, as well as setting out plans to accomplishing them. And don't get mellow - revisit and revise your business plan annually.

3. Entrepreneurial excitement: Entrepreneurs often get excited about new ideas, but are unable to determine if they're "true opportunities" and/or put them into practice. Test every new idea against your business plan and mission statement before deciding whether to undertake it or not, and ask yourself, Do I have the time and skill to implement this?

4. Putting all your eggs in one basket: Too often, small business owners will have just one product, one service or one big client. They cling tight to this one thing because it brings in good revenue. But what if the one thing disappears? Variety and diversification will cushion you against the ebb and flow of business tides.

5. Poor record keeping and financial controls: Yes, you have to keep financial and business records, you have to review your revenue and expense report each month, and you have to file taxes and other business-related filings. If you don't know how to do these, or don't want to, get help from someone who does.

6. Lack of experience in running a business or in the industry you're entering: There are so many hats you have to wear, from marketing and selling in order to run a business effectively. On top of that, you have to understand your industry, the skills required to offer your products and services, and the trends in the industry. If you don't know about these basic skills, educate yourself. Talk to others who are successfully running their own businesses, talk to industry leaders, get a book, find a website, get a coach, do your homework. And keep increasing your business and industry skills by attending classes or reading new books every year.

7. Poor money management: You need to be able to live for one to two years without income when getting started; often businesses are very slow to get off the ground. Also, you have to create and use a realistic business budget, and not constantly drain the business income on personal spending.

8. Wrong location: If your business runs out of commercial space, you need to make sure that you are convenient to your customers, and near to your suppliers and your employees.

9. Competition: Customers will go where they can find the best products and services. It's important for you to know who your competition is, what they have to offer, and what makes your own products or services better.

10. Procrastination and poor time management: Putting off tasks that you don't enjoy will sink your business faster than anything else. You can't afford to waste time on unimportant tasks while critical tasks pile up. All tasks need to be done; if you don't like to do them (or don't want to spend your time doing them), hire someone to do them for you. If your time management and prioritizing skills are rusty, hire a small business coach or take a class to help you.

11. Ineffective marketing: Learn the basics of marketing and make sure that you track the success or failure of each marketing technique you use, then dump those that aren't working.

12. Ineffective sales techniques: Once you have a potential client, you have to know how to lead them down the sales path. If you don't understand the basics of selling, get some education on it immediately. If a selling technique doesn't work, try another one.

13. Poor customer service: Once you have a customer, you have to keep them. There are two key points here - make sure you pay attention to what the customer wants (and how these wants can change over time), and make sure you provide quick return of phone calls and emails, proper billing, win-win problem solving and an overall pleasant demeanor.

14. Entrepreneurial burnout: owning your own business requires a huge investment of time, money, energy and emotion. It's easy to work long days and forget to take time off. But in the end, this only causes burnout where your motivation and creativity will suffer, and a pessimistic attitude prevails. You'll find yourself unable to balance your business and personal life, and both will suffer. Schedule self-care time into your work week and be religious about taking time off from your business.

Dunn and Bradstreet recently did a study and determined that "90% of small businesses that fail do so because of a lack of skills and knowledge on the part of the owner." However, D&B also did a study that showed that over 90% of small businesses were still in business after five years IF they had the help of a Small Business Development Center (SBDC) or other expert assistance. You can find a list of the SBDC in your area here:

http://www.passionforbusiness.com/web-resources.htm

As Tammy and I concluded our coaching session, she made a list of the areas where she needed to grow, and created a task plan to get the help she needed. Today she has a thriving business and is happily self-employed. You can do it, too. It just takes a little planning and a close look at both the reasons for your success and where you might need to get a little help.

Karyn Greenstreet is a Self Employment expert and small business coach. She helps you increase sales and profits, and learn practical small business skills.

Get the free audio and ebook, "The Art of Networking and Referrals" by visiting http://www.PassionForBusiness.com

Related articles

• Ad-ology Forecast: U.S. Small Business Plans for Online Video, Mobile Marketing Up Sharply for 2011 (prweb.com)
• Want to survive? Then its time for an annual small business plan (usatoday.com)
• Local Market Lists Power Sales for Small Businesses (prweb.com)