By Lebohang Mofokeng 18 June 2017
The first step in writing an effective business plan is to understand what a business plan is, what type if information is contained in a business plan. And also to understand what the benefit of a business plan is to you as an aspiring entrepreneur.
A business plan is a formal document that details the goals of a business, the strategy that will be used to achieve those goals. The purpose of writing a business plan is to provide you, the entrepreneur with a crystal clear picture of the likelihood of success for your business in a rapid and ever fluctuating dynamic business environment
A business plan essentially is a roadmap for your business; it tells the story of why your business exists (vision)? It speaks of what your business want to achieve (mission), and of speaks of how your business plans to achieve its vision and mission (strategy).
The general outline for a Business Plan is:
· The cover page – should include the company name and logo
· Executive summary – summarizes and provides an overview of the document.
· Overview of the business – describes the business, the vision and mission, the legal structure of the entity.
· Industry analysis – trends demand outlook, barriers to entry and growth, impact of innovation and technology, impact of economy, government and financial health of the industry.
· Market analysis – understanding your target market, its demographics
· Marketing strategy – details how you plan to sell your products/services, how you plan to promote your product/services in an effort to attract potential customers. The strategy describes your product, the pricing methods used, how you plan to distribute you product/services and in which locations, also includes the different marketing communication tools (e.g.PR, Advertising, Events and sponsorships) that will enable you to reach your potential customers.
· Management and operations plan – organizational structure, roles and responsibilities , and support (professional services)
· Strategic implementation plan – staff, staffing issues, systems, communication, bookkeeping, equipment, software, office, furniture, fixtures, land and buildings, research and development.
· Financial plan – Is there to provide a reliable and detailed financial breakdown of costs, revenue, profit, cash-flow projections
· Supporting documentation and supporting documentation – any research from primary and secondary research sources that provide a factual basis for the business plan.
Benefits of a business plan.
Members of the Young Entrepreneur Council, an invitation only non-profit organization comprised of the country’s most promising young entrepreneurs cited the following reasons as being some of the benefits of writing a business plan:
“Writing a business plan or putting together an investor deck allows you to think more clearly about what you’re doing and where you are going. Key point to remember though is that the minute that your business plan hits the printer it is already out of date, so don’t depend on it as your to-do list. Think of it as a roadmap.”
“The biggest reason to write out a business plan regardless of any financing option concerns is that it can help you stay organized and remain on track. Businesses without a plan can easily get off-target, and revenues will suffer as a result. Creating a plan with expense projections, revenue forecasts, and more can help a small business remain committed to its long-term goals.”
“Writing a business plan is an ideal way to make sure that everyone on your founding team is aligned with the current and future plans for the business. In the early stages of a company, it’s imperative for founding team members to be on the same page as to how they’ll work together on moving the business forward to great success. Avoid any miscommunications by getting it all on paper early.”
The business plan should be based on empirical research. Primary research – being the collection of information that is directly related to your product or service offering, it is information that is collected to validate the existence of a problem or need, that your product/service offering can solve. Collecting secondary research – being information that already exists, that can be found in books, periodicals and general business reports.
So an aspiring entrepreneur should spend a lot of time developing his/her product or service offering. And also understanding the different dynamics of the market and industry of which the business plans to operate in. understanding their customers and their behaviour. And while writing a business plan, all ideas should be tested by conducting research, this will either validate or discard your idea. And whether or not there is a need for your product/service in the market.
For more information on business plans and starting a business visit: SEDA(Small Enterprise Development Agency) – an initiative from the Department of Trade and Industry. Log onto www.seda.gov.za Email: Info@seda.org.za
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From the day an entrepreneur starts a business, he exposes himself to certain risks. Even before the first employee is hired, a business is at risk, making it important to have the right insurance in place.