Developing a business Plan

As an entrepreneur you should be familiar with the business plan, this is a document describing in detail the nature and objective of the business venture. It is vital to know how to draft a proper business plan for various reasons. Today we will only look at the importance of drafting one.

1. Sell the business to yourself
You need to be able to sell your idea to yourself since you are the most important stakeholder in the venture. As an entrepreneur you need to convince yourself that starting the venture is the right thing on both a personal and investment point of view.

2. Obtain investment funds
There are a number of private investors available that you could obtain funding from, whether its venture capital or informal capital.

3. Secure bank finance
Banks require you to have a written business plan when seeking a business loan. In order for you to stand a fighting chance at obtaining the business loan you need to construct a convincing plan. Banks have become wary to lending start-ups that are categorized as high risk, which is why a business plan has become an essential component.

4. Secure big contracts
As a small company seeking ongoing orders or contracts from large corporations, they are often met with “who are you? Everyone knows who we are so why should we do business with you”. In order for you to answer this question properly, you need to have a business plan.

5. Keep focused and motivated
As a small business venture grows and becomes more complex, a business plan can help keep everyone focused and motivated on the same targets and goals.

6. Attract key employees
Convincing the best employees can somewhat present itself as a challenge for small businesses. As a growing company you will need to present a convincing business plan to some employees in order for them to believe that the company is going to thrive in the coming years.

There are other plausible reasons for drafting a business plan; it can help you evaluate the chances of the ventures survival rate, or help you identify key components that can determine the success or failure of the venture. You may also use a business plan as an instrument to compare actual results against targets and goals.

Why is planning important for my business?

Planning has been defined as the first step in the management process. It gives a business the direction needed to achieve its goals. I have compiled a small list of reasons why we should incorporate planning in the overall management of small businesses.

1.       Gives direction

This is the most important function of planning, it allows you to see where you business is heading. By stating your goals in your plan you have essentially stated what you want to achieve, how you will achieve it, and by when you will achieve it, giving your business direction.

2.       Facilitates control

Control allows you to measure the actual performance of the business against set goals and plans, wherein you can take corrective action if necessary. Without planning it becomes difficult for you to take control in the business.

3.       Promotes co-ordination

By setting out goals, the activities in your business become focused in one direction. Members of your organization become aware of those goals and they easily co-ordinate their activities and work as a team.

4.       Reduces the impact of change

This could be described as reducing business related risk also. Formulating a plan and setting goals allows the business to anticipate change that may affect them in the future. This in return reduces uncertainty, risks, and guesswork caused by change.

5.       Assists in organizing

Organization in a business is plays an important role because without it the successful implementation of a plan is not possible. By making a plan you can easily see the different parts of the business that are reconcilable with each other as well as the primary targets of the business as a whole.