“If you don’t have the road map, you really are putting yourself at a serious disadvantage.”– James A. Lowery
Business planning tends to get treated as an academic exercise by many writers and consultants. They talk about such things as ”the planning process,” ”deriving a strategy,’’ ‘‘the organizational hierarchy,” and ”modeling approaches.” However, planning should not be viewed as an academic exercise. Entrepreneurs can enhance their chance of success by taking time to write a business plan. The process of thinking about your business venture and then articulating it on paper will assist you in thinking through how you are going to accomplish your goal.
What is a Business Plan?
Every business operates under a plan: the absence of a plan is itself a kind of plan. In the small business environment plans tend to be informal: they arise from periodic discussions between the principals and are understood as a kind of consensus in which all individuals involved will be aware of the important issues and expectations. Active planning tends to take place when change is perceived and “something must be done.” The transition to formal planning tends to evolve with increasing size–when management realizes that formal communication of intentions will be beneficial and necessary to obtain everyone’s cooperation. At first such plans may be in the form of memoranda with the subject “The Year Ahead.” They may take the form of a Mission Statement that, in part, specifies goals and broadly outlines the means to their achievement. Later such plans will become ever more structured.
Planning documents in any business come in two forms. One is the “business plan” entrepreneurs use to obtain funding. The other is the “annual plan” that business elements submit to the next level of management for approval. Annual plans may take the form of budget requests with minimal descriptive text or they may be structured documents with “required” rubrics such as “competitive analysis” and “human resources.”
Business plan can also be defined as;
- A business plan is a document that convincingly demonstrates that your business can sell enough of its product or service to make a satisfactory profit and be attractive to potential backers.
- A business plan is a written summary of an entrepreneur proposed business venture, its operational, its financial details, its marketing opportunities and strategy, and its managers’ skills and abilities.
- A business plan is a selling document. It sells your business and its executives to potential backers of your business, from bankers to investors to partners to employees. A business plan should be a selling document. It should sell the business to stake holders. The business plan describes the direction the company is taking, what its goals are, where it wants to be and how it is going to get there. Be aware that a business is not a document that you sit down and write over a weekend. Invariably, it is the result of many weeks and months of research and evaluation. A business runs without a plan is reactive instead of proactive. In today’s changing world, a businessperson must plan in order to succeed. Without a plan, it is difficult to know when additional employees, materials, or machinery will be required to support growth, and when products or services will be ready for release to the market.
In short, the business plan is the entrepreneur’s best insurance against launching a business destined to fail or mismanaging a potentially successful company. Many entrepreneurs agonize about writing a business plan because they find it so difficult to get started. As you go through the start-up process of evaluating ideas, considering prospective employees, and calculating cash flow needs, you should take various points that raised in this section.
A business plan is effectively your map for achieving your vision. It provides the link between your strategy and your required actions. An effective business plan provides an operational framework that makes sure decisions about products, services, customers and human and financial resources allow you to deliver your vision and mission.
The business plan allows the entrepreneurs to exploit the opportunities that arise in the life of a business. A written business plan becomes entrepreneur’s business representative, much as a sales person or executive serves as its representative during sales and conference presentations and meeting.
Read More About: Creating a Business Plan
External Links about Business Plan:
- Your Business Plan Guide (Entrepreneur)
- Why do you need a business plan? (Canada Business Network)