EVERY new business begins with an idea. So where do you go from there? Depending on whom you speak to there just seems to be a great number of ‘essential’ ‘first steps’ on your way to starting a business. There is no denying, however, that the one step considered most vital for any venture is none other than planning! To quote an often used phrase ‘If you fail to plan, then you plan to fail!’
What is a Business Plan
Basically a business plan is a blueprint for your business. The easiest way to visualise it is to imagine building a house. Just as you would not just start nailing planks together or stacking bricks together without first drawing up a plan, you need to have a plan on how to start and run your business.
However, it must be kept in mind that the business plan is not static. Just as your business and the surrounding environment will develop and evolve with time, so must your business plan. No business is static and as it grows your objectives, strategies and goals will evolve accordingly.
Why Should You Write a Business Plan
Planning will help you put things into proper perspective. It will help you to fill out the many details involved in actually starting, operating and managing a business. The ‘Business Plan’ is, therefore, an essential tool in the entire process. It will help you clarify what you are going to do and where you are heading, and further, is also a necessity when it comes to securing funding.
Below are some of the reasons why putting in some effort to write a business plan can be advantageous for you.
a. To find out if your business idea is any good and if it is really feasible
Writing a business plan is the best way to test whether or not your idea for a business start-up is going to work. By going through the process of writing a business plan and the related market and competitive analysis you will get a real feel of what it involves, in terms of your own capabilities and the market you will be operating in. This will give you a feel of whether your idea can survive, given your available knowledge and resources.
In this way you will avoid a non feasible business venture. On the other hand it may also open your eyes to new and better business ideas to pursue.
All in all, writing a business plan may save you the trouble and expense of starting and failing, especially in an uncertain environment, such as we have today. Once you have felt out the various aspects involved you will be more confident that the idea you have will be well worth the time, money and energy you will be investing in it.
b. To serve as a road map for developing your business
When working on a full-scale business plan you will work through all the nitty gritty details involved in starting and running a business. It serves as a start up guide and plan for the initial years of your business start-up.
When you work through the details you will be more aware of the essential details you need to take into consideration particularly operational and financial details. By working through these details you will be aware of potential opportunities and pitfalls to look out for, budgets you will need to adhere to and your sales and marketing process as well. This detailed outlook will help you in making the start up period much smoother with less unforeseen problems being encountered.
c. To secure funding
While most start-ups are begun with personal savings and personal loans, the ability to secure business loans is essential for the continued survival of the business. This is actually one of the prime reasons you should make the effort to embark on writing a business plan.
Most financial institutions and related establishments will not entertain any request for funding or a business loan without a well developed business plan being presented to them. This is the case be it for start up capital, operating funds or for expansion purposes. Having a well developed business plan will ensure you a better chance of securing the funding that you seek.
d. To attract investors or partners
If you are in the market for potential investors or partners a solid business plan is more likely to attract potential investors and partners.
Potential investors would require a well written document which they can analyse and study, where the financial and marketing projections included will be of particular interest to them. Your projections and estimates should be realistic as potential investors will do their own investigations to make sure that your ideas and plans have a solid foundation. Also be prepared for detailed scrutiny of your background overall the business plan must convince them that they will gain from investing in your idea or venture.
e. To manage your business growth effectively
While a business plan is essential for a start-up it is no less of importance to an established business as it is the perfect tool for planning and managing your business. Businesses are not static, they grow and evolve with time. As this happens, so must the original business plan drawn up. The process of reviewing the progress of your business and amending your business plan accordingly will ensure that your growth is planned and focussed. Reviewing the business plan can also help you see what goals have been accomplished, what changes need to be made, or what new directions your company’s growth should take.
The added advantage is that it will provide you an updated document to be used for any other purpose at any point in time be it to secure loans, attract investors, etc.
Components of a Business Plan
What goes into a business plan? Four distinct components that we incorporated are as follows:
1) Description of the business
2) Marketing
3) Finance
4) Management
While the main components of the business plan remain the same, different businesses will need different styles of business plans. Further, you will also need different types of business plans depending on the purpose of the plan.
Business Plan Resources
The process of drawing up a business plan can be time consuming and tedious, especially for those who are not familiar with the concept. However, help is at hand as there are several resources available to assist you in the process. The choice of resources will depend on your needs and means.
Business Plan Consultancy
There are several agencies and corporations, both public and private, which provide business plan consultancy services. These consultants and advisors are normally well versed in business and marketing fields. They will be able to assist you by analysing your business, objectives and goals and advise you on how best to prepare the business plan according to your specific needs. Getting the assistance of these experts could be a good start particularly for small businesses with little or no knowledge on how to go about the process of preparing a proper business plan.
Online Business Resources
In today’s internet age there are various resources available online to help you get started. In addition to online firms offering their services there are also various sample templates available which you can download and use to draw up your own business plan.
Business Plan Software
There are also many kinds of business plan software available today, both online and off the shelf. These software programmes incorporate the essential elements which need to be included in a proper business plan. They guide the users, sometimes through a series of questionnaires which are used to generate a plan for the business owner. Currently, the SME has a wide assortment of tools at their disposal. All you need to do is to select the one most appropriate for your needs.