As former British Prime Minister Winston Churchill once said, "Failure to plan is planning to fail." While most entrepreneurs and small-business owners recognize the need for a business plan, they may face challenges with the plan preparation process. Some small-business owners think a business plan is only needed as a document to present to investors or lenders. They don’t recognize that the real value is the thought process that goes into creating the plan. Having a plan in place improves a small-business owner’s chances of building a competitive advantage and achieving long-term success.

Time Commitment

Creating a business plan takes time. It's not something that is completed within a few days. But small-business owners often overestimate the time commitment required, which prevents them from even getting started. Others try to work on the business plan an hour here and there, after work or on the weekends. They never give the planning process the needed focus or dedication. One approach is to break the planning process into manageable chunks of time, scheduling work sessions of two to three hours several times a week.

Unrealistic Financial Projections

Entrepreneurs often overestimate their companies’ potential revenues and underestimate the expenses required to generate these revenues. With early stage companies, the forecast in chart form resembles a hockey stick -- after the first year, forecast revenues and profits soar. A plan should be based on reasonable assumptions. For example, most small businesses are not able to double their revenues from one year to the next. If possible, base your projections on what other companies in your industry have been able to accomplish.

Developing Marketing Strategies

In developing marketing strategies, it is important to know who your target customers are, but just as important is creating strategies that show how you will reach these target customers and crafting a marketing message that motivates them to make a purchase. One problem with a small-business owner’s strategies is that they tend to be too vague. They show what the owner intends to do, such as expand his business from marketing in one state to multi-state marketing, but don’t include the specific steps or action plans required to make the strategies a reality. Another problem is creating strategies that are beyond the company’s financial or human resources capabilities to implement.

Difficulty Envisioning the Future

The business planning process involves creativity. A small-business owner has to envision the scope of her company’s operations one, two even five years from now. This vision must be based on a sound assessment of the outlook for the general economy and the industry the company operates in. Because the business environment can change rapidly, predicting it is extremely difficult and is a problem business owners must deal with when preparing their plans.

Finishing

A business plan is a working document. It's not meant to sit on the shelf until planning time rolls around again next year, and it may be revised during the course of the year. But a small-business owner sometimes has trouble determining when the plan is finished. From his standpoint, there's always one more set of projections to complete or another scenario to forecast. The problems are he lacks confidence in his planning ability and doesn’t recognize it is impossible to write a perfect plan. The changing nature of the business environment means that actual financial results are likely to vary from what the business owner projected in his plan.