Common Business Owner Planning Mistakes to Avoid

Common Business Owner Planning Mistakes to Avoid

You want your business to succeed, but nearly 1 in 4 new businesses fail to realize they’re making these common business planning mistakes.

You’ve invested all your time, energy, and money into creating your business to meet your vision. The last thing you want is for it to fail. 

Unfortunately, many new businesses end up failing pretty quickly. The Bureau of Labor Statistics found that about 25% of new businesses fail in their first year of operation and barely 25% make it beyond 15 years.

Why is this the case? It largely has to do with improper business planning. Without the right strategy and means to execute it, it’s nearly impossible to establish a strong foundation and grow.

With the right plan and financial advisor behind you, you don’t have to become another statistic. Read on to learn the top five business owner planning mistakes to avoid. 

5 Common Business Planning Mistakes to Avoid

Understanding these common mistakes is your first step to successfully avoiding them. 

Let’s go through each one in detail.

Mistake #1: No Comprehensive Business Plan

It’s no secret that a business plan is a must when starting a new business or taking an existing business in a new direction. 

Your business plan is the lifeblood of your organization, outlining everything from current market conditions to ideal revenue streams and expense plans. 

This document is crucial to not only attracting investors but also to laying the groundwork for goals and the processes needed to achieve them.

Without a plan, businesses will be forced to navigate:

• Missed opportunities in the market for an in-demand product or service
• Financial management issues
• Disorganized processes and operations 

A clear, realistic, and metric-based business plan is critical for setting your business up for long-term success and avoiding common mistakes.

Mistake #2: Ignoring Competitors

Next is failing to research and understand competitors thoroughly. It may sound like common sense, but it can be tempting to overlook.

The right approach involves conducting a competitive analysis, evaluating the market and its shifts, and assessing how consumers respond to changes in the landscape. 

If you ignore the competitive side of things, you risk price wars, ineffective marketing, and challenges in differentiating your business. 

Looking at what your competitors are doing can help you not only generate ideas but also further differentiate yourself from the competition.

Mistake #3: Unrealistic Financial Projections

You have to think big to even dream up a business idea in the first place. But be careful not to create unrealistic, overly optimistic financial projections. 

If your projections aren’t realistic, you’ll find yourself scrambling to handle cash flow problems, difficulty securing funding, and missed profit-building opportunities. 

Your business plan should outline how you’ll raise capital and establish how you’ll use that capital to create realistic growth expectations. 

Set timelines to keep track of performance and adjust accordingly. 

Mistake #4: Neglecting Business Tax Planning

When you’re reviewing financials, don’t forget about tax planning. 

Without giving taxes the proper attention, you may accidentally:

• Choose the wrong business structure
• Miss out on deductions that help you save big
• Underestimate the quarterly payments you have to make
• Miss tax deadlines due to a lack of preparedness

First, talk to your financial advisor about the right business structure. Your choice will depend on the size, industry, cost, and priorities of your business. 

A sole proprietorship may be attractive if your business is based on freelance work, but the added liability protection and tax benefits of an LLC or S Corp may be what you ultimately require if you hold a lot of personal assets in your name.

Whichever option you decide to pursue, ensure you have a plan for getting your tax obligations under control. 

Mistake #5: Lacking Flexibility

You can’t plan for everything, but you can prepare for anything. Successful business owners understand how to roll with the punches. As you’re thinking through your small business planning, keep an adaptable, flexible mindset. 

If you’re too rigid, you may unwillingly limit your business’s response to changing market and consumer dynamics. What you see in your mind’s eye—what you think you need to do to succeed—may be completely opposite of what truly must be done.

The goal is to be able to face whatever comes with a well-thought-out strategy, even if it has to pivot from moment to moment.

Your ultimate goal should be to arm yourself with enough contingency plans such that you can properly adjust and pivot wherever and whenever your business needs it. The professional expertise that an experienced financial advisor brings to the table can help you prepare for such instances accordingly. 

Extend Your Business’s Lifespan With Help From Avior

These mistakes may seem small, but they can majorly impact your business. The more you plan and are realistic about what’s possible, the greater your chances of success. 

One of the best steps you can take on your business planning journey is to work with an expert at Avior. Our team customizes our wealth management services to help you set and reach your business goals. 

Contact Avior today to learn more about our small business planning solutions and to schedule a one-on-one consultation.

Disclaimer: Nothing contained herein should be construed as legal or tax advice. Avior and our Advisors will work with your attorney and/or tax professional to assist with your legal and tax strategies. Please consult your attorney or tax professional with specific legal and/or tax questions. Investment Management and Financial Planner are offered through Avior Wealth Management, LLC, an SEC-registered investment advisor. Past performance is not a guarantee of future results.  Investments are subject to loss, including the loss of principal.