Business plan is a prerequisite for gaining access to finance and provides the blueprint for running a new enterprise. It describes the business's vision and objectives and strategy that will be employed to achieve them. The business plan also identifies who the potential audiences for a business plan are and what things each member of the audience will be looking for.
The plan will identify the market, its growth prospects, the target customers and the main competitors. The business plan would identify potential risk and the action that would be taken to mitigate the risks.
In order to test, explore and refine an idea a business planning process first needs to examine the idea in the context of customer and market demand. If the customer is not interested there is little point in pursuing the idea further.
Once the idea is proven from the customer's perspective, the business plan will also test the idea strategically. How strong are the barriers to entry and can competitors react and if they do - how? Although a new product or service might be a great hit with customers if you cannot prevent everyone else from copying your idea you will gain little traction with potential investors.
The business plan would also answer the question "how do we actually turn the idea into a reality?". An implementation plan and budget are the two key outputs. The operational plan is also required to generate operational Key Performance Indicators (KPIs). These sector specific indicators (footfall, occupancy rates, stock turnover, churn etc.) allow an investor to quickly ascertain whether assumptions are out of line with industry benchmarks.
With the main elements of a potential business in place, the business planning process usually turns to the financial aspects and the development of a financial forecast. Any potential investor will usually be much more concerned with how much money they are going to have to invest, when they are going to have to invest and how can they safeguard their investment rather than how much they are going to make.
The business plan forces you to seriously consider whether there is a market for your idea and to find objective proof of it. You have to consider all the practical aspects of the business, not just dream about the good bits. It forces you to calculate the costs of setting up and running your business and whether you can make a profit in the long run and have enough cash to survive in the short term. A business plan is not just about establishing the validity or not of an existing business idea. It is also refining that idea based on your thinking and research.
The business plan is a plan of action that remains important once you start. There is an overwhelming amount to do when setting up and running your business (or expanding your business) and a plan allows you to prioritise the most important tasks. When things do not go according to plan, you can take action. You also need to adapt your plan and keep communicating changes to important stakeholders and staff.
Without a clear plan in your head, you will struggle to get potential partners, staff or financiers enthusiastic about your business idea. Having a clear focus and direction gives other people confidence that you know what you are doing - this goes for banks as well as customers.
Our business planning process usually utilize the best of management tools and techniques such as: Feasibility study, Strategic planning, Industry and competitor, analysis, Product and portfolio analysis, SWOT analysis, PEST Analysis, Generating strategic options, Market analysis and strategy, The operational plan, Model the business, Funding issues, Risk analysis, Presenting the business plan and obtaining approval.
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"The training was nice, quite informative. Project management was made so easy, especially because of the wealth of experience of the instructors and their ability to illustrate the processes.
Mr Lawani Odunayo,
CEO, Archvision Work Group Limited.