Nigerian Entrepreneur

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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Who is more qualify to give tips for small business success? A professor in the business school or a die-hard small business owner digging it out in the trench. I have observed that some of the successful small entrepreneurs who are now celebrities in their industries never attended business school (some were even college drop-outs). Many of them ran uphill against better judgment of business scholars while starting their small business. When they were starting, nobody believed they will succeed, however, against all odds they persevered with the seemingly stupid ideas and gut feelings and succeeded.

I studied business in school, but it has not been of much help in the hostile economic environment I do business in.  What has really helped much is  listening to successful entrepreneurs who are practicing what they teach. My business mentors who are practicing entrepreneurs have helped me better in my entrepreneurship adventure. One of them  jokingly said that the recent global economic crisis is a proof that success in business is not achievable by propounding theories and hypothesis on paper.

It is all about learning how to survive by participation in the business guerrilla war. To help you get properly kitted, here are ten proven tips for small business success.

1. Knowledge is power. Learn as much as you can about the business idea you want to implement. Hey, you don’t go to the battle field to learn how to shoot a rifle! That will be suicidal. Go get yourself a business mentor.

2. Your estimate may be wrong. Accept the fact that starting a business always takes more money and time than you anticipate. That is why you are better off starting now while someone is still paying you salary in your day job. Waiting to invest your gratuity in a small business is not the best idea. Start on part-time basis.

3. Study successful competitors carefully. It is survival of the fittest out there. You need to know as much as you can about your competitors.

4. It is not all about money. If you go into business with the sole objective of making a lot of money, you will simply end up a loser. If you put quality service and customer satisfaction as your goal, money will naturally follow. People will exchange they money for satisfaction, nobody will give you money just because you want it (except you are pointing a gun to their head).

5. Being your own boss doesn’t mean you will do less work. Get prepared to harder and longer than you have ever worked before. Until you establish a system that the business can run with, there is no relaxation. Stop dreaming about a vacation in Hawaii with all expenses paid by your small business. Diligently set the business running with a good system, first. When you have accomplished that, you can then dream of cruising around the world on a 90days vacation.

6. Keep accurate records. Even though your hate Tax and the IRS, in your own interest and for your own safety keep complete and accurate records. This is not just for tax purposes, your banker may require it. Also, it serves as a good reference for your future ventures.

7. Get good and reliable employees. You can’t do it all alone. Even though you are starting from your bedroom, as time goes and your small business grows, you will need to delegate tasks.

8. Right from day one, make friend with a lawyer, an accountant, a banker, and an insurance agent. I know not many people love this professionals because of their high professional fees. Instead of waiting until the day of trouble before inviting them, go and make friend with them before you ever need their service. Friendship won’t cost you money, just time and good behavior. If you have them as friends, you will spend less when you need their services.

9. Mind your own small business! You heard me right. Don’t be a fool that invest his life saving in a small business and then handed it over to an employee who was hired by him. Of course the business took less than six months to run aground. Run your business yourself. never take vacation when you have not establish a system that can run without your physical presence. No one will look after your money, your property, and your business like you will.

10. Remember Abraham Lincoln. You may need to learn how to do it right by first learning how not to do it wrong several times. Get ready for disappointment and frustration as you start your business. There is no successful entrepreneur who did not experience that. Heroes are made by battles, champions are made by challenges. So don’t quit, be persistent and never give up on your dream.

One final word before I stop. Or rather I’ll ask you a question. I think asking a question is a better approach, here it goes.
How much success have you achieved by reading up all the business books you’ve ever read? The truth be told, your answer is nothing. Isn’t it? This post will be of no benefit to you if you don’t start a small business of your own! Remember wisdom is the proper application of acquired knowledge.

A small business of your own will provide you the much needed laboratory for testing and trying out the tips for small business success shared above.