Every social enterprise needs a business plan.
No matter how significant your social purpose, or how unpalatable the task of working on the commercial aspect of it may be, without a plan, your enterprise will struggle to reach its goals.
Unfortunately, too many business plans are tackled without the experience required to ensure they’re truly effective. As a result, they’re riddled with errors that could be easily avoided.
In this post, we’ve picked out six of the most common business plan mistakes your social enterprise should avoid at all costs.
1. The business plan… isn’t actually a plan
A great business plan should be a roadmap for your social enterprise. It should detail the end goals and the intermediary milestones that need to be hit in order to get there.
That means it needs to be as specific as possible about how you’re going to reach those goals.
A milestone for your social enterprise might be to sign its one-hundredth client or open a second facility after year three. Whatever it is, make sure your business plan contains the necessary steps required to get there.
2. You’re certain you have no competition
In fact, just as ‘business plan’ is a phrase you’d rather keep as far as possible from your social enterprise, the word ‘competition’ may also feel rather unpalatable.
After all, you’re here to change society for the better – and how can there be any competition in that?
Claiming your social enterprise has no competition is extremely risky – because it does. There will be both direct and indirect competitors vying for the space your social enterprise will occupy in the market, and if you pretend they don’t exist, they’ll fast make a bigger impact than you.
Identify your competition and then work out ways you can differentiate your enterprise and gain an advantage. Trust us – they’ll be doing the same!
3. You haven’t researched thoroughly
It’s amazing how many business plans include inadequate research.
It’s vital that you make sure the facts and figures in your plan are on-point. Take time to learn everything about your industry from purchasing habits to customer motivations and fears.
Where do your competitors (see point 2) currently sit within the industry? Are your financials realistic?
Potential investors and bank managers will do their due diligence, so make sure you get a head start.
4. The plan is way too detailed
If your business plan weighs in at one-hundred-and-forty pages – most of which are taken up with complex technical details about your service offering – few people will bother to digest it.
Technical details are important, but they’re not for the business plan – keep them somewhere separate.
Business plans should be broken up into three clear parts:
- An executive summary (two-three pages max)
- The business plan itself (twenty pages max)
- Appendix (as big as required to demonstrate you know what you’re doing)
A business plan of that size stands a far greater chance of being read by those who need to read it the most (that includes you and your partners!).
5. The plan is incomplete
Lots of business plans start off with the best intentions, but end up missing crucial elements.
This is usually because the social enterprise kicks itself into life during the writing of the business plan, and managing the former is both far more exciting and time consuming than completing that once-important Word document.
There’s no getting away from the fact that you need a certain amount of stamina and will power to finish a business plan, but finish it you must.
Avoid leaving out the tricky financial projections (monthly cash flow, income statements and the like), and ignore the temptation to get started before you’ve finished planning – you’ll regret it in the long run.
6. Your business plan looks sloppy
By ‘sloppy’ we simply mean ‘rushed’.
Even if you’ve written the business plan well, you’ll undo most of your hard work by neglecting the importance of formatting and presentation.
Business plans should demand to be opened, and that means a certain level of design needs to go into its creation, from the front cover to the accompanying imagery and textual layout.
Consider your business plan a branding exercise; make it entirely the property of your social enterprise and ensure every page makes it clear to the reader that you mean business.
Writing a business plan is hard work, and that’s why so many people either avoid the task entirely or only grant it fifty percent of their effort.
However, the more time you spend on the plan for your social enterprise, the more chance it will have of succeeding.
Remember, it can be a document that changes, too – you don’t have to get everything right first time. Consider your business plan a moving, evolving thing which grows with your enterprise as you begin to make the impact you’ve dreamed of.