What is a Business Plan?
This is a document that helps you create a written outline that evaluates all aspects of the economic viability of your business venture including a description and analysis of your business prospects. While it may not ensure your success, a business plan on one hand provides a useful roadmap as well as a financing tool if you maintain a correct assessment of the changing economics of your business; while on the other hand, if you have miscalculated the potential, then your business plan could become a roadmap leading to failure.
It is recommended that you write out your business plan yourself, in your own words, bearing in mind that creating a business plan is an essential first step for any prudent entrepreneur to take, regardless of the nature and size of the business. In writing your business plan, do not expect that all the initial assumptions of your plan will be correct. Look at your business plan as an ongoing assessment that you will frequently review and change to conform to actual operating experiences. For instance, your cash flow projection should be updated frequently to ensure ongoing liquidity (not running out of cash).
Your business plan is a working document; a roadmap to help you chart the course of your business. At the outset of your business, one cannot predict all of the changing conditions that will surface. It is important that you periodically review and update your plan, after you have opened for business to align to changing conditions and environment.
Benefits of a Business Plan
- To define and focus your objective of your business using appropriate information and analysis.
- To serve as a selling tool in dealing with important relationships including suppliers, lenders, investors and banks.
- To uncover omissions and/or weaknesses in your planning process.
- To solicit opinions and invaluable advice from people, including those in your intended field of business. Inputs from experts could save you from potentially disastrous mistakes that can result in unnecessary hardships. People to meet with include your investors, family members, banker, lawyer, attorney, business mentors, trusted business friends, potential customers, competitors (distant ones), potential landlords, and the Small Business Associations or groups.
Stick with short-term objectives and modify the plan as your business progresses because long-term planning becomes meaningless because the reality of your business can be different from your initial concept.
Be extremely conservative in predicting capital requirements, timelines, sales and profits. Few business plans correctly anticipate how much money and time will be required.
Avoid ambiguous or bogus language or explanations that are difficult to understand. Outline strategies in the event of business adversities. Don’t depend entirely on the uniqueness of your business or even a patented invention but ensure you have great economics.