This one mistake is so critical that it jeopardizes the immediate survivability of your start up company – even before you get started.

What is the second biggest mistake?

Many cost-sensitive entrepreneurs depend on number crunchers, bean counters and newly minted MBAs for their projections – just to save a few dollars.

New start up CEOs doom their new company by pinching pennies in the wrong place. Instead, what they need are pivotal insights from experienced consultants who can provide the guidance the entrepreneur needs for producing a realistic, genuinely implementable business plan.

Your business plan is not some academic document – instead, it is your crucial road map to successful implementation of your vision for your new company.

The most important part of any business plan is the detailed financial projections that are the basis for the entire business model of every new start up company. There are four sets of underlying assumptions that drive all the projections:

Start up costs – what will you need to spend up front to get the company going? Sales forecast – the single most important set of assumptions for your whole plan – how many of what, will you sell, for how much, at what costs, when? Personnel – how many, of what kind of employees, will you need at what cost, when? Operating costs – what will it really cost to be in business, generate sales, give necessary sales support and exemplary customer service and cover all back office expenses?

Every part of your financial projections is just arithmetic – based on those four sets of driving assumptions. Because it is just arithmetic, many entrepreneurs make the often fatal mistake of assuming it is trivial and can be done easily and cheaply.

But – if you guess wrong on any of these assumptions, then most of your projections are wrong – including two of your most important projections: your cash flow and your capital needs. If you guess wrong on your assumptions that impact these, then you will probably run out of money and your new company will fail.

Number crunchers and bean counters are great at arithmetic. So are newly minted MBAs. And, they can be relatively cheap to hire. But this cheap hire may be the most expensive mistake you will make as a start up CEO.

These cheap hires almost never have any experience base or expertises that help entrepreneurs make meaningful assumptions. So, entrepreneurs who use this approach for their business plans end up with GIGO: garbage in, garbage out projections that are misleading at best – but more often, fatal in the end.

As the adage goes, the only thing worse than going the wrong direction – is going the wrong direction enthusiastically. By basing your business plan on the wrong assumptions, you end up going the wrong direction – probably enthusiastically – believing your bean counter-generated plan will be the path to wealth.

Entrepreneurs who have thought they were saving a few hundred dollars by hiring cheap number crunchers or inexperienced MBAs, end up losing everything they’ve invested in their new company – all because they were penny wise – and dollar foolish – or rather, thousands, hundreds of thousands or millions of dollars foolish.

Cash is always limited for start up companies – but this is one place you do not want to get trapped by false savings.

What’s the best way for you to avoid the second biggest mistake for your new start up company?

Hire an experienced management consultant who specializes in start up companies – particularly a consultant who has started at least a dozen of their own companies. That way, you get insights based on real life experience that will help you end up with a genuinely implementable plan for the future – your future and the future of your new start up company.

A business plan format is a way for the right assessment of a business considering all the critical factors that serves the business purpose and helps in achieving goals. These formats are not always the same but vary according to the size and nature of the business. A well defined business plan format can form the base of a successful business.

There are some important topics that help in formatting a business plan.

An overview of the business gives a concise description of the purpose of the business and the goals.

The people involved in the business have a major contribution in running the business successfully. Their prior experiences and the resume must be furnished in the format. Exaggeration and lies must be strictly avoided as this format is read very carefully by those, with whom the business relation may develop. If there is any lack of ability to perform any key function; that can be included in the plan and ways for compensating that deficiency must be specified clearly.

The intentions and the plan to carry out the business must be described in the format keeping the focus on the target in the market which is going to be served.

A careful assessment of the economic environment in which the business has to run must be provided, as the success of a business depends largely on the current economic scenario based on the demand-supply equation of the market.

Assessing the cash flow is another important factor in the business plan format, so as to maintain a regular cash flow to meet the essential capital requirements. Probability of financial crisis and the ways of crisis management must be mentioned in the format.

The business plan must include the marketing plans and strategy leading to the expansion of the business.

One must avoid specifying too long term objectives in the format as it is better to go for short term objectives as it will help in modifying the business in its due course of progress.

If you are an entrepreneur seeking capital for a new business, then you will need a business plan and in this business plan the potential investor if they are savvy will be most interested in the marketing aspect of your business.

Below is a sample of a “marketing strategy statement” and identification of the target market. In this example we are discussing an oral hygiene product, that was invented by Charles Shooster in the 1990s. This is a good case study because, first it is a real product being developed and two, because it is a mass-market consumer item. Please read the below sample in the “rough draft” form:

MARKETING STRATEGY

Our marketing strategy is simple; we will avoid the high-costs of buying shelf space at the major retailers and allow them to come to us or go around them. Our goal is to sell massive amounts of products, but without the insane up-front capital costs to develop instant brand recognition in the consumer market. We run hard and run to win, and watch the cash flow.

Target Markets

We see many target markets and yet are not na

You may be a start up organization in need of a business plan layout to drive you towards success. Or perhaps you are a Solo home based entrepreneur or a well established long term company. You may be a large organization employing more than 100 people or what if you are a not for profit charity or organization wanting to grow. One thing holds true; you need a business plan to move forward.

All types of businesses are obviously in existence in hundreds of different industries and separate niche areas – but one thing holds true – you must have a business plan to drive your growth. But why have a plan after all, only half of all businesses appear to have created one. Here are 5 compelling reasons why a business plan is a must have tool.

Business Plan Layout Essential #1: You have a summary of your vision and goals

Without a vision and goals summarized in the Executive Summary how do you ascertain where your business is going? I mean you would not build a house without a plan so why do so many people go into business without a written down plan of attack? Studies show only around 56% of all small businesses has a current plan.

Business Plan Layout Essential #2: Analyse and plan your product and services benefits and how you will take these to market.

The best approach to marketing anything is to analyse each service or product offering, work out how it will benefit the end consumer and build a strategy around telling prospects or customers about it effectively. So your business plan layout must include a section on Market Analysis and the key strategies you will use over a 12 month period.

Business Plan Layout Essential #3: The crucial financial analysis

The very best plans have a projection on profit and loss for at least 12 months ahead. There is a budget, balance sheet and cash flow tables showing the past, present and future possibilities – where practical.

Business Plan Layout Essential #4: Who and what will your management team be doing to drive growth?

Management Analysis for your plan will describe the organization and the key team members and their exact tasks, key performance indicators and accountabilities. Here is a summary below of a perfect business plan layout:

1. Executive Summary: Write this last. It’s just a page or two of highlights.
2. Company Description: Legal establishment, history, start-up plans, etc.
3. Product or Service: Describe what you’re selling. Focus on customer benefits.
4. Market Analysis: You need to know your market, customer needs, where they are, how to reach them, etc.
5. Strategy and Implementation: Be specific. Include management responsibilities with dates and budgets. Make sure you can track results.
6. Web Plan Summary: For e-commerce, include discussion of website, development costs, operations, sales and marketing strategies.
7. Management Team: Describe the organization and the key management team members.
8. Financial Analysis: Make sure to include at the very least your projected Profit and Loss and Cash Flow tables.

Lastly, ensure you will implement your plan so results happen. Too many companies spend months creating their plan only to see it gathering dust in the bottom of their desk drawer. No one intentionally does this. It is just that the every day process of completing your normal work duties can often mean implementation is put on the back burner. Take this business plan layout above and make it work for you.