The Four Key Functions of a Business Plan.
1. The Business Plan as a Viability Study.
A Business Plan’s most important function is to take you through a process of checking whether your business idea is viable or not. How will the idea work? is the question you constantly pose when you put together your plan. If you do it properly, the plan will show you whether your idea has the potential to work or not. The process of drawing up a business plan takes you through every aspect of it, compelling you to ask crucial questions like:
- Will there be enough buyers for your product or service.?
- How much will they be willing to pay?
- How will you reach them?
- How will you make your products?
- What do you need to make or stock them?
- Where will you get raw materials or stock?
- How many people will you need to keep the whole thing running?
- What skills will they need?
- Will you have enough cash to pay them before the business starts making money?
- What do you have to spend on equipment and overheads?
- How much money can you eventually expect to make when all these expenses have been deducted?
Once you have systematically answered questions like these, you will know with a degree of certainty – never absolute certainty – whether your business will work or not. Unfortunately, people think of Business Plans first for starting a new business or applying for business loans. Killer Business Plans are also vital for running a business, whether or not the business need, new loans or expanding a business. Businesses need Quality Business Plans to optimize growth and development according to plans and priorities.
2. The Business Plan as a Strategic Planning and Focusing tool.
Compiling a Business Plan shapes your strategy, in other words the broad direction your business will take. It will help to clarify what you should be focusing on, and also what you should not allow yourself to be distracted by. This is very important: A business person without a strategy nearly always ends up trying to do too many things at once, jumping at every opportunity, losing focus, and before long losing the business. Developing a Killer Business Plan can make the difference between success or failure. Millions of businesses do not have a proper Business Plan. They are simply reacting to the conditions that exist, much like a sailboat on a windless day.
3. The Business Plan as an Operational Guide.
By “Operational Guide” we mean a day-to-day plan. It may surprise those who have never compiled a Business Plan before to know how much detail it gives. For example, it tells a manufacturer, exactly how many products will have to e made and sold each month, how much of a certain kind of raw material must be ordered and when, and how much profit can be expected in a financial year. We know that in the real world things don’t go exactly according to plan, but that is no reason not to have detailed Business Plan. A Business Plan makes it possible to see exactly and immediately to what extent things have not gone according to plan. Keeping your eye on the Business Plan enables you to predict danger and opportunity far better than a business owner without a plan can, and it puts you in a better position to adapt your plan accordingly. A proper Business Plan is a flexible, changing, living document.
4. The Business Plan as a Financing Tool.
Only when you have refined the Business Plan as a viability study and strategic planning tool should you use it to convince others to invest in your business, or to lend you money. You will need a dressed – up version of your real Business Plan – typed accurately, clearly laid out, and neatly bound. Presentation is important, but you should never embroider or elaborate unnecessarily. Seasoned investors and financiers see right through decorations. And there is nothing that makes them say “no” as quickly as getting a whiff that you don’t know what is going on in your Business Plan.
- A practical Business Plan includes 10 parts implementation for every one part strategy.
- The Unique Business Plan should provide a forum for regular review and course corrections.
- Killer Business Plans are practical not complicated and drawn out.
BUSINESS PLANS “DONT’S”
- Don’t use a Business Plan to show how much you know about your business.
- Nobody needs to read a long-winded, boring Business Plan: neither bankers, investors or bosses are interested in reading a 100 page thesis.
- In the market at present , nobody is interested in a Business Plan more than 50 pages long.
Bankable Business Plans don’t sell new business ideas to investors. They invest in people, ideas but not Business Plans. A quality Business Plan though necessary, is only a way to present information.
PROFESSIONAL AND WINNING BUSINESS PLANS.
If you are a business owner, a business manager, or going into business for the first time, you will at some point need to develop a proper business plan.
A business plan is typically designed for either or both of the following purposes:
- To establish a framework for management to use as they pursue the enterprise objectives.
- To convince an investor that a capital investment in the enterprise’s business is a sound financial decision.
Editing is the process of selecting and preparing written, visual, audible media to convey information. The editing process can involve correction, condensation, organizing and other modifications performed with the intention of producing a correct, consistent, accurate and complete piece of work.
Nothing highlights sloppiness more than a document with spelling and grammar errors. If you have a completed plan or other documents make sure someone read it and copy edit it to ensure that there are no mistakes of any kind.
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