Developing a business plan

If you want to be an entrepreneur and start your own company, you need to create a business plan. Your business plan is absolutely essential for your business as it's your blueprint for the future. It sets your direction and keeps you on track once you're up and running. It's also a requirement when you're seeking finance.

So let's get started:

Why prepare a business plan?

A business plan has many benefits. Probably the most important are that it will define your business objectives and allow you to uncover issues, weaknesses or challenges that need to be addressed before you actually get started. However a plan will also be a necessary requirement should you need to borrow funds to finance your business as lenders will want to thoroughly assess the risk associated with your planned venture.

It is also a good idea to find yourself a mentor who you can share your plan with. There's nothing wrong with getting advice from people who've been in the game longer than you or who have a different area of expertise. Your mentor can also provide a good reality check as one of the most common mistakes that entrepreneurs make is in selecting a sound business concept. By using your mentor as a sounding board you can ensure there isn't a significant gap between your concept of a good business idea and reality.

Do's and don'ts of business planning

Long-term projections are top of the list of items that should be avoided, and in case you're not sure what long-term means, anything further out than one year should be avoided for a start-up firm. It's much better to stick with short-term projections to begin with and revise the plan regularly as you progress.

Be realistic. This applies throughout the entire plan. Few start-ups accurately anticipate the time and money required to get their business off the ground - think about this when you are predicting capital requirements, timelines, sales and profits.

We operate in a world that is constantly changing so it's important for the success of your business that you are able to anticipate and deal with change. Think about the potential adversities your business could face and then consider what strategies you could implement to overcome these issues. Spell these things out in your plan.

Use simple language - convoluted and complex terms don't help anyone to achieve anything!

What to include in your business plan

Plans will differ from business to business however the information that is relatively standard in business planning includes:

  • Executive Summary - a one-page overview written after your business plan is finalised.

  • Introduction - your introduction should explain the purpose and objectives of going into business.

  • Marketing Analysis - this section of your plan examines the industry you are entering and how you fit in. It is important that you ensure the industry is stable and there is room for your business as well as those that already exist.

  • Marketing Plan - this part of the plan is your strategy for marketing your products / services. Who is your target market? How will you let them know about your business and encourage them to buy from you?

  • Operations Plan - the operations plan is all about how you'll structure the business. This includes things such as structure, location and regulations.

  • Management Plan - how will you manage your business? Do you need to employ other staff? Will you outsource some business functions? Staff play a critical role in business success. Particularly for start-ups, it's important that you find people who believe in your vision and are committed to what you are trying to achieve.

    It's also important to hire people who have the skills that you lack. Define your unique ability and seek out others who turn your weaknesses into strengths.

  • Financial Plan - your financial plan is a synopsis of how you intend to finance your business and it should include costing and financial projections. Most entrepreneurs don't come from accounting backgrounds so this may be an area where it would be worthwhile seeking expert advice. Would you bet your savings on something you know nothing about? People make this mistake in business all the time.

Business planning is an ongoing activity - you should regularly review and revise your business plan.

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