Why must I have a business plan?
Well, the answer is simple. Creating a business plan is an essential step for any prudent entrepreneur to take, regardless of the size of the business. Skipping this step is tantamount to planning for business failure. There is an adage that, He who fails to plan has planned to fail.
What is a business Plan?
It is a roadmap detailing how an entrepreneur will move a business from its current status to the intended status. It details the current status of the business (finance, manpower and other resources) the goals of the business, reasons why the entrepreneur is convinced that those goals are achievable and strategies to be employed for making the goals a reality.
It is an attempt to predict future opportunities and put in place financial, operational and marketing strategies that will enable the entrepreneur achieve his/her goals. That sure sounds complicated, isn’t it.
Well, you need not bother, simply put a business plan is a map showing where you are now, where you intend to get to and how to get there. So the key elements you need to bother about are: Where is my business now? Where do I intend my business to be in Xmonths (6months, 12months or five years, it all depends on the individual. However, 12months is recommended as ideal time frame). How do I get there? Now that the definition is out of the way, lets get down to business.
Purpose of a Business Plan
The primary purpose of a business plan is to create a written outline that evaluates all aspects of the economic viability of a business venture. It must spell out in details your business goals, business prospects, the resources required and the strategy for attaining your goals.
It is unfortunate that most startup entrepreneurs are reluctant to write down their business plan. Your business plan is the roadmap you will need to chart the course of your business.
Common Myths about a Business Plan
1. A business plan is not meant to be an excuse to procrastinate your business startup! If you are starting a home base business, it is not necessary to write volumes detailing all the beautiful dreams you have about the business. You will be better off if you jot down a few essential points and then start implementing them immediately.
2. A business plan is not meant to be cast in iron. As you make progress in your entrepreneurship journey, you will often review your business plan to make changes. So , don’t be afraid of making mistakes. You can always amend it as you get more understanding of the business.
3. Creating a business plan is not an attempt to write the next best seller. It is simply a business map to guide your business journey. So, don’t get stuck trying to write the most wonderful business plan.
4. Business plans can’t all be the same. As ventures vary, so business plans varies. Factors such as types of business, opportunity, goals, size of business etc all contributes to the variance of one business plan to another.
Advantages of a business Plan?
Your business plan is going to be useful in a number of ways.
1. First and foremost, it will define and focus your objective using appropriate information and analysis.
2. It will aid you when dealing with potential investors, lenders or banks.
3. Your business plan can uncover omission and/or weakness in your planning process.
4. You can use the business plan to solicit opinions and advice from people, including those in your intended field of business, who will freely give you invaluable advice.
Pitfalls to avoid in your business Plan
1. Use simple language in explaining issues. Make it easy to read and understand.
2. Use reasonable time limits on future business projections. Better to stick with short-term objectives and modify the plan as your business progresses. Too often, long-range planning becomes meaningless because the reality of your business can be different from your initial concept.
3. Avoid optimism. It is advisable to be extremely conservative in predicting capital requirements, timeline, sales and profits.
4. Don’t assume someone won’t get a better idea than yours. Even if your business is dependent on a patented invention be realistic that competition will eventually arise.
5. Don’t spend so much on startup. Success comes to those who start businesses with great prudence and not necessarily great startup capital.
6. Do not ignore spelling out what your strategies will be in the event of business adversities. The raining days will surely come it is part of the normal business cycle.
Now that you understand what a business plan is, it is time you grab a pen a notepad and start wrting down the beautiful ideas that you’ve been dreming about all this while. Don’t be afraid of making mistake. Just put something down on paper first. In reality, it is practically impossible to predict all of the changing conditions that will surface. So, just put your best on paper first knowing that after you have opened for business, you will need to periodically review and update your plan.
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