Last week, we started looking at the business plan. We did wave off the misconception of many who believe that the only reason a business plan is developed is to convince potential lenders or investors to provide financial backing. We did elucidate that a business plan goes beyond that function to aiding in quantification of your goals beside it serving as an important management tool.
I presume that, by now, we should be referring to a written business plan and not the ones stuck in our head and committed to the memory cellar. While planning it all in your head can be temptingly easy to do and make you avoid the ruffling of paperwork, you will die with your ideas if you don’t write them down.
Not very surprisingly, a number of businesses die a natural death the moment the initiating entrepreneur dies. None of the children nor spouse can sometimes do enough to rescue it for they know neither how to run it nor where to go for help.
This week, we proceed to look at some of the exact functions a business plan can play for you. We begin by taking a look at the plan being a guide for you when you are just beginning a new business.
Starting a business is a big step. You have to have a good idea, flesh out all the details needed to put it into operation, and be firmly convinced of your ability to make it work. As already pointed out, having it all worked out in your head is one thing, but for most entrepreneurs, it’s only when you take the time to create a written document that embodies your thoughts that you realise the scope and magnitude of what’s involved in running a business.
In your head, you’ve concentrated on the idea. In your plan, you can examine the nuts and bolts of running a business to exploit your idea.
Every business that opens successfully has one thing in common. The owner believes that the product or service to be offered is unique in the particular marketplace. Such entrepreneur does not think: “I’ll open another goat liver stand that is indistinguishable from a hundred others in my town”.
But there is more to a business than offering a unique product or service. There are also all the unspectacular parts of the business, from keeping the books to paying bills and taxes. With very limited exceptions, most businesses have a lot going on in the background behind the core business activity.
Assuming that you’ve considered the personal impact of starting a business and you’re certain you want to proceed, remember one thing—if you work hard to create a business plan and your plan demonstrates that you can’t profitably exploit your idea without making some pretty wild assumptions, you haven’t lost anything.
To the contrary, you’ve saved yourself the time, money, and heartache you would have spent on a hopeless cause. It is far better to realistically appraise your chance for success before you commit your time and money to a new enterprise. Not every good idea is immediately, if ever, feasible.
If you are considering a wholly new business, a big part of the planning process is going to involve developing an initial set of assumptions. You’ll have to make assumptions, just like an economist, regarding costs, labour, number of potential customers, pricing, and many other factors.
You will learn a lot about your prospective business going through this process. When you do move ahead and implement the plan, you will be far better equipped than you would have been if you had just jumped in with both feet. Not only will you have a written plan for guidance, you will have started to hone your own planning abilities, providing you with just a little better chance than your less-prepared peers.
Have a blessed weekend as you put your brilliant business ideas on paper!