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.
If you enjoy this post on Creating A Business Plan, say so in a comment and also subscribe to my RSS for future updates. Cheers.
“Avoid optimism. It is advisable to be extremely conservative in predicting capital requirements, timeline, sales and profits.”
Most definitely! One of the biggest pitfalls in business is being too optimistic about how quickly you’ll make a profit. This is one place where you really need to take all of those “what-ifs” into consideration, and budget for them.
Businesses fail every single day because their owners assumed everything would go according to plan. But it never does.
Excellent post! I look forward to reading more.
Lee
how about to write a business plan on property development:i.e building of property ,selling for the customer and to per take in any investment opportunity
@Geyser
Thanks for visiting and adding your thoughts. Cheers.
Nice Post. I really like it.. Thanks for sharing..
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.
There I was in my little world with dreams of being probably the most starightforward MMO blogger from Naija but you beat me to it. The day I clicked on your link I was expecting to see trash like I’ve seen on most naija MMO blogs but instead I was caught off guard. Lord knows I’ve been using those bad blogs to deceive myself that there’s no one doing what I’m doing right now. Hmm. Boy was I mistaken.You don become my greatest competition. LOL. Better still, you’ve become somewhat of a mentor. Hopefully I’ll still be around in the MMO niche for a second year.
@Chukwudi
Good talk. One of the reason why the developed nations are doing better than African nations is because of their attitude on sharing knowledge. Africans horde knowledge while the western nations share ideas and even encourage others to build on it. Cheers.
wow
i like your comment…
True talk, you are concise on what a business plan is and what it should do.
one of the reasons also why the developed nations are doing better than the African nation is that we Africans don’t spend quality time on research making like those developed nations
@marcus
I quite agree with you. Too many African entrepreneurs are in a hurry to see result. They don’t just want to wait. No wonder several small businesses in African dies within five years of formation. We need to learn to do the right thing.
In a Nation like Nigeria, so many business look feasible on paper but when you start executing them, you find out that the countries economic instability and poor infrastructure will make it impossible.
But we will not stop trying until we are able to overcome the unfavourable economic condition of this country.
Regards
Chikezie
Nice brief.Keep up the good work of assisting young entrepreneurs like me.
Nice post on importance of a business plan bro. See info about Business Plan here: entrepreneurshipsecret.com/why-do-you-need-a-business-plan/
i need someone who can help me to write a good business plan on importation of rice business because i had a financier company who are ready to finance the project for me.please you can get back to me at italiojohn@gmail.com.
thanks
my dear great entreprenuer kindly pls give me some tips on how to start up a bakery biz i really want to contribute to the development of the nation by given out or feeding the community
Thanks for visiting. I am not into bakery, so I am not in a good position to advice you. I do hope someone that is into bakery business will come around and respond to your request. Meanwhile, I strongly suggest that you visit two or more bakery outside your neighborhood (as far as possible away from your neighborhood) and request to see the owner. Make your request for help sincerely and you will be surprise at the kind of information you will get. The farther you are away from your neighborhood, the easier it will be for the baker to speak sincerely since he/she won’t be seeing you as a potential
threatcompetition to his/her bakery business.Everything is right, of course. Just to add some tools and resources:
http://www.smetoolkit.org (a public-financed toolset for startups);
http://www.wickedstart.com (a virtual business incubator in US);
http://www.iplanner.net (a free online business plan software)
TO set up profit making business,your first consideration should not be to make profit but to withstand a long term profit making business by planing well through necessary steps.Above all,business environment determines business success……………
Hey! am so happy i found this site, but i really need help on business plan for a business I want to start, and how one can raise money from the bank
You don’t need to need much capital in other to start a business. but with a good business plan you can get a sponsor. forget about bank, there are almost unrealiable. I will help you with no charge. contact me on my email.
“In reality, it is practically impossible to predict all of the changing conditions that will surface”.
Entrepreneurs often make the mistake of predicting the profit margin only,without necessary consideration of the expenditures which in turn affects profit. I like your post.
Thanks, you made a very valid point there. Too many focus all attention on the profit margin. It is often not just about immediate profit. It is about keeping customers happy for a long-term relationship. That is what brings long-lasting success in business.