THE BUSINESS PLAN FOR SMALL BUSINESS
Are you failing to plan, or planning to fail?
A business plan is crucial to the success of any business. This plan is simply a step-by-step exercise in forward thinking. A sound business plan should contain crucial budgets and cash ﬂow forecasts that will show how much proﬁt you can expect your business to make, how much ﬁnance you will need and the risk involved. This helps to demonstrate your business idea, how you want to implement it and the long-term viability thereof.
The importance of a comprehensive business plan that is well thought-out cannot be overemphasised. Much hinges on it: outside funding, credit from suppliers, management of your operation and ﬁnances, promotion and marketing of your business and achievement of your goals and objectives.
Surprisingly, many entrepreneurs drag their feet when it comes to preparing a written business plan. They argue that they do not have enough time, or that the market changes too fast for a business plan to be useful. But just as a builder would not begin construction without a blueprint, eager business owners should not rush into new ventures without a proper business plan. A good business plan is your roadmap to success.
Before you begin writing your business plan
Before you begin writing your business plan, consider four core questions:
1. What service or product does your business provide and what need does it ﬁll?
2. Who are the potential customers for your product or service and why would they purchase it from you?
3. How will you reach these potential customers?
4. Where will you get the ﬁnancial resources to start your business?
Your business plan should do the following: Top
A. Identify the target market by deﬁning your audience; the size and scope of the market, with details about competitors, your pricing and marketing strategies.
B. Explain the beneﬁts of your product or service, how it is unique and its appeal to customers. Include information about your company’s location and how that location will beneﬁt your business.
C. Show that you have effective management, with people who not only have the necessary business skills, but who also work effectively together.
D. Focus on the future by attempting to develop forecasts of relevantnt business trends over the next three to ﬁve years. At the same time, do not be too optimistic in estimating sales potential. Allow for the best, worst and most likely scenarios.
E. Highlight current and potential problems and show how they will be overcome. This helps you avoid problems and boosts your credibility with investors and lenders.
Develop a ﬁnancial plan that includes a capital equipment list, a balance sheet, income statements or projections for three years, cash ﬂow statements, break-even analyses and loan applications.
10 reasons why small businesses fail
Inadequate business planning
Over-investment in ﬁxed assets
Lack of management experience
Poor inventory and cash ﬂow management
Poor credit arrangements
Personal use of business funds
Competition or lack of market knowledge
Low sales/not pricing properly
Writing Your Business Plan
To consider financing, financial institutions requires a comprehensive and well-motivated business plan from which a thorough understanding of your existing or proposed business, your own goals and objectives and your financing requirements can be obtained.
Click Here for guidelines on writing a business plan.