Starting A Business 6: Business Plan
In our business start-up series 5, we raised several questions to find answers in order to be sure of adequate market for your products. The next step in the business start-up process is the business plan where you will write down all the product information you have gathered, and the result of further investigation or research of the target market. You may require professional assistance to use all available information provided by you to determine the profitability of the business and its funding requirements. A well written and realistic business plan is one of the requirements for getting funds from potential investors and partners and loans from banks and other financial institutions.
A business plan is not just required to get funding, but is primarily meant to help you manage the business effectively. A business plan is necessary whether or not you need to borrow money to fund the business. As a potential small business owner, you should be fully involved in the writing of the business plan to reflect your business philosophy and ensure the use of correct information and assumptions. It should not be completely out-sourced to professionals who do not understand the business and your target market and who may eventually present to you a beautiful but unrealistic business plan.
You should think twice before you accept a business plan written without significant input from you. Firstly, you may not be able to defend it before potential investors and partners because it is not really your business plan, even if you are familiar with it. Secondly, it cannot help you to manage the business because you do not know the assumptions behind the document and therefore not in a position to confirm the correctness of the figures used. Thirdly, a business plan needs to demonstrate your passion and vision for the business which you alone may clearly understand.
A business plan is not cast in iron and stone. It can be adjusted and updated regularly based on changed circumstances, new information or new focus.
Every entrepreneur starting out in business should create a business plan. A business plan demonstrates that you have given careful thought to the business. It shows that you are serious about the business and is an evidence of your commitments. A business plan will help you to understand your business and the market better.
In its simplest form, your business plan should respond to the following questions adequately and convincingly:
1. Where do you want your business to be in the future?
2. Where is the business today?
3. How will you take the business to where you want it to be?
4. How much money will you require?
5. Who and where will the money come from?