Would you set off on a long journey without directions to your destination? Few of us would knowingly take the risk of losing our way and perhaps never reaching our goal. Starting a business is akin to a long journey: you need directions; a route map to success.
A good business plan provides you with that route map. It is the essential guide by which you navigate your way to achieving your aims.
For some, all this looks rather daunting. It should not be. When you are accepted into the Mentor Programme, a mentor will be appointed who will guide you through the whole process. Your mentor will not write the business plan for you, as it is most important that you have ownership of the business plan and thoroughly understand all its contents. Business plans prepared, often at considerable cost, by third parties more often than not lack the vitality, knowledge and understanding of the entrepreneur.
As the author of your own business plan it may be tempting to cut some corners and not fully explain things on the basis that you know what you mean. Too often explanations are omitted as being unnecessary. There is also a tendency to use trade, professional or industry jargon as a type of shorthand. Often this jargon is not understood by readers other than yourself, thereby reducing the ability of third parties to understanding of your project. It is also important to understand that your business plan will be read when you are there to answer questions. It is a stand-alone document that should be a complete communication in itself.
Apart from being your own route map, your business plan has important other uses. It is a most important tool in convincing others that you and your idea are worthy of support. These include:
Business plan templates are somewhat like motor cars. They are designed to get you from where you are to where you want to go. Just like cars, they come in bewildering variety. Some are massive and intricate: suitable for launching General Motors. Others are simple and straightforward and, therefore, much more suitable for start-up and micro businesses. At the end of this article we publish a template that, in our opinion and experience is good for new and young businesses. However, you may have good reason to choose a different template. Business plan templates are downloadable from bank and other financial institutions' websites and elsewhere on the Internet. Your mentor will be happy to work with whichever you choose.
The essence of a business play may be summed up in the word TEN. T stands for TEXT, E is for EVIDENCE and N for NUMBERS.
TEXT is the narrative or 'story' part of the business plan where you write down the Who, What, Where, Why, When and How of what you want to do. EVIDENCE provides the supporting facts and figures. NUMBERS are the supporting financial statements that prove there is a real business in prospect.
Another key point to stress is the 'uniqueness' of your business idea: what makes it different from competitors so that it will be able to win out. Some times this may be difficult to see at first glance. You may think that your idea is similar to another existing business just like Pepsi and Coke. But by putting you business in a different location, with different pricing, packaging and selecting a different market sector or location.
An important fact to remember about a business plan is that its purpose is to communicate effectively so that support is forthcoming for your business idea. A lot of people seem to hold the view that such documents should be weighty and serious tending towards the boring. Imagine that you are a banker, an executive of an enterprise board or an investor who spends hours a day reading business plans, many of which are dull and boring. Then along comes a bright colourful, well illustrated and well written plan whose style and presentation make it easy to read and understand: which would you choose?
Almost all new businesses need a business plan in order to successfully move from startup to established business. But a business plan doesn't have to be long or take months to write in order to be a useful tool for small business owners.
This exercise provides a quick and painless start to the business planning process by asking you a series of questions about your business, your goals and your future plans. The end result is a streamlined and brief business plan that you can use as-is or as a starting point for a more traditional business plan.
Time Required: 2-3 Hours
1.Outline the vision you have for your business by answering these questions: What are you creating? What will your business look like in one year, three years, and five years?
2.What is your mission? Why are you starting this business, and what is the purpose?
3.List your overall objectives by outlining your most important business goals, and answering: Are your business goals considered SMART goals? How will you measure success in achieving your goals?
4.Write down your business strategies by answering these questions: How are you going to build your business? What will you sell? What is your unique selling proposition (i.e., what makes your business different from the competition)?
5.What is the total startup capital you will need to launch your business?
6.What do you estimate your business's ongoing monthly expenses will be immediately after launch, in three months, in six months, and in one year?
7.What do you anticipate your business's ongoing monthly income will be immediately after launch, in three months, in six months, and in one year?
8.Create an action plan by answering: What are the specific action items and tasks you need to complete now? What are your future milestones? What will need to be accomplished by those milestones in order to meet your objectives?
The most common questions I hear from entrepreneurs who are starting a new business are, "Do I really need a business plan? Is writing a business plan really the best use of my time?" My answer to these questions is almost always, "Yes."
In reality, business plans can take a long time to write, require that you have a tremendous amount of data at your fingertips, depend in part on projections, and often are responsible for creating a long list of research you still need to conduct and other work you need to complete.
But despite all of that, business plans can be one of the most effective tools for the small business owner who is starting, growing and even managing a business.
Here are what I consider the most important reasons you should write a business plan before doing anything else in your small business.
If you plan to approach a financial institution for a loan, apply for a small business grant, pitch your business idea to investors, or enlist the support of a business partner, a business plan is required.
Potential investors and supporters want to see the true potential of your business idea clearly laid out in hard facts and numbers. A business plan is the best, and generally, the only acceptable way to provide this information.
There are some sections in a traditional business plan that you simply cannot complete if you are on the fence, undecided, or not fully committed to a certain point. Business plans help you eliminate the gray area because you have to write specific information down in black and white. Making tough decisions is often one of the hardest and most useful parts of writing a business plan.
For example, if you have not decided on exactly what products you will sell at what price points, it will be very difficult for you to complete the Products and Services Section of your business plan. Identifying this and other vital information is a valuable end product of the business planning process.
Writing a business plan is often the first real struggle for the small business owner who wants to launch a new venture, but doesn't want to consider that his or her business idea may be a bit flawed or is not yet fully developed.
While this is an unwelcome and terrifying thought for an impassioned entrepreneur, identifying gaps early on in the process gives business owners a chance to shore up their research, test their ideas and take steps to make the business stronger and more viable. This may initially be a step back, but any and all further work can bolster the entrepreneur's chance of success before he or she invests time and money in a business that is likely to fail.
Discovering new ideas, different approaches and fresh perspectives are some of best things that can happen from the depths of the business planning process. Despite the sometimes negative reputation, a business plan isn't just a long, stiff, and structured document.
In fact, an effective business plan is the opposite; it's a flexible, growing and dynamic tool that can help you think creatively and come up with new solutions for some of your toughest business challenges. This is especially true when you consider the Marketing Strategy Section. Here, as you create a blueprint for your marketing activities, creativity and fresh ideas are invaluable.
A business plan is a useful document for any small business owner. But when you use your business plan as a tool to help you outline action items, next steps and future activities, you are creating a living, breathing document that not only outlines where you are and where you want to be, but also gives you the directions you need to get there.
Going back to the original question of whether or not you really need a business plan, you may still be able to build a successful business without a plan, but it is most certainly easier to do with a well-constructed business plan in your hands.
For more on business plans, review this business plan outline. Then, for a quick and painless start to the business planning process, try this simple business plan template.