Starting a business without a business plan is like venturing into a race without a clear direction, thereby posing serious challenges for the fledgling business. Shockingly, a reasonably large percentage of businesses in Africa operates without a business plan.
Under normal circumstances a new business venture should have a clear purpose, usually to satisfy specific customer needs which will in turn define the future of the business venture and its expected growth trajectory.
This article examines essential considerations in the preparation of business plan for new ventures, by exploring definition and purpose of a business plan, basic considerations in the preparation of business plan, and benefits new business ventures stands to benefit in designing an effective business plan
A business plan defines your business value proposition, articulates your operations and business objectives. It provides specific and organized information about your company and business. It enables you, as a senior manager of your business to look ahead, allocate resources, focus on key areas and prepare for both current and future challenges and opportunities. In summary, a business plan is necessary as it:
helps you to define your business and focus on your aim
helps the business owner to identify weaknesses of planning process
serves as selling tool when approaching investors and financial institutions
serves as a tool to get opinion and advice of from professionals, mentors and colleagues
In preparing a business plan, it is usually advisable to limit unnecessary future projections, given that short period, current realities of your business may be different from the initial idea, which technically means that short term objectives are more realistic.
Also, you need to spell out risk management strategies and continuity plans in case of business adversities. You should however keep the language and explanations simple and brief.
Business planning is based on specific hypothetical scenarios concerning the business. In more practical terms, to make the business plan suitable for its purpose, it is appropriate to dig into helpful resources on the internet where real samples of business plan and good ideas on how to compile your own plan for your business purpose can be obtain.
In summary, a standard business plan for whatever type of business should contain the following components: Executive Summary, Table of Contents, Company Description, Products or Services, Marketing Plan, Market Analysis, Operational Plan, Management Plan, Financial Plan and Appendices. Details of expectations on contents are provided below:
This is the opening section of a business plan. It provides compact and concise outline of the whole plan. The section should contain information such as the nature of the company, product and services to be provided, uniqueness of product or service, managers of the business and the extent of the capital requirements, performance and return expectations. It is the most important section of a business plan, as such it is important to make the section interesting. Table of Contents
This should be restricted to a page and it should contain list of everything your plan includes with the page numbers.
It is another essential content of a business plan and should contain information about how company started, growth story, current status, plans for the future. A bit of history and performance could be added.
Products or Services
This section should be designed to focus on customer benefits, through answering the following questions: what products or services will the business offer and what makes them different/unique..
This section contains information on research you have done on the industry and market, value chain, government regulations, opportunities, customer behaviours and other related market information.
This section examines current market segments, your specific target market, their location (where you can find them), market needs, channels (how you can reach them) and marketing strategies (how want to capture the market).
This section discusses critically what is involved in effective execution of the business plan. It takes into consideration value proposition, marketing strategy, pricing strategy, promotion strategy , distribution strategy and other related operational considerations.
This section includes details such as sales forecasts, cash flow statement, cash flow projections, balance sheets, performance metrics and other financial information.
Provides information about the management of the company, the people on the Board of Directors, and individuals responsible for day-to-day management of each department.
A business plan usually include appendices. This is where detailed information and references which are necessary/important but could make your document clumsy and boring are included. Research sources, detailed profile of management, are examples of items to include in appendices.
In conclusion, a business plan is like a steering wheel of a business. It keeps management team informed about expectations at each stage of the business venture. It also provides the business owner with detail plan on business milestones and growth path. It is also used to convince investors that the business in question is the right business to invest in. It is hence an essential managerial tool for business ventures, new or existing.