Business Plan - Business Strategy
Prospective entrepreneurs and business owners of new start-up businesses believe that a business owner only needs a written business plan or business strategy if one wants to borrow money from a financial institution. This is a fallacy. Starting a business without having a clear vision, business strategy, business plan and goals is the same as allowing a blind man to drive a vehicle. He will crash, sooner or later!
The business plan or business strategy is all about planning and executing all required outcomes in all facets of the business. It all starts with having a mission for the business and keeping to the mission of the business. It’s all about achieving practically and properly set business goals.
Business strategy requires that you conduct a proper market research which will indicate a niche market that your business can capitalize on. If you do need to borrow, the bank manager will need a written Business Plan. Keep the business plan simple and to the point. If you answer all the questions below carefully you will have created a business plan.
Financial institutions or private lenders will want to know how the business will be set up, organised and managed. Some of the answers that they need are:
Does the business owner or the staff employed by the business have the technical and financial skills to run the kind of business that they plan to start?
What is the business environment? In other words, is the social, legal, political and economical situation in your business conducive to running the type of business that you will represent in the business plan?
Where is the business located? Location of a business is very important. Is it accessible to your customer base? How large is this customer base?
Where are the suppliers and who will be the customers? Without suppliers and customers you have no business. This question tests to see if you have adequately researched your suppliers and customers. Suppliers are the persons who supply raw material and required components to the company. They must be reliable. Your business must have multiple suppliers and not depend upon only one supplier.
How much profit will the business make? The amount of profit that you will be able to make is the yardstick used to make sure that you will be able to repay the business loan.
How much will the business owner contribute towards the business start-up costs?
What personal assets does the owner have?
The answer to the last two points are very important to any institution or person that will lend the money. Lenders will expect the business owner to share in the risk. This means that the prospective business owner needs to show that he/she can contribute not less than 10% of the total amount needed to start and run the business. The logic behind this is that if the business owner also stands to lose money if the business is not run properly, then the business owner will take care of the business.
A business plan is actually an organizing and business planning tool. With a business plan you can actively plan and create the path that you want your vision of the business to follow. Remember, if you are making the effort and taking the time to design a business plan, you must fully commit to following the business plan.
Tip: I use a whiteboard and marker to plot my business progress. In this way I know where I am at a glance. The whiteboard is in a dedicated room where I have peace and quiet, with no interferences or distractions.
My mind never seems to switch off. Most of my best business ideas come to me at night. When inspiration happens, I rush to my whiteboard and pin brightly coloured sticker pads with my thoughts written down on the wall next to the whiteboard. The colourful sticker pads are fantastic reminders. Sometimes I make use of a voice recorder so that I do not forget brilliant ideas. The aids mentioned above helps me to keep focused.
I still remember how I felt when I planned how to start my first business. I did not really know anything about planning en at that time there wasn’t as much information as is available today. In actual fact, when I started my first business, internet and Google was not a factor.
I knew that I had to plan the business start-up in steps. To me it seemed as though I was an ant trying to get to the top of the highest tip of the Drakensberg! Many trees were killed to supply me with paper! After a few days I realised that I had to break down everything into small manageable tasks and not try to deal with everything simultaneously. Like my mother said: “one step at a time.”
If one start a small business as a sole proprietor it is usually started, run and operated by one person. This means that everything that must be done to get the business up and running is your responsibility. If you have registered as a partnership or any one of the other business entities, the responsibly will be shared. In this instance, everyone should be assigned a responsibility and given deadlines for completion. It’s all a question of what must be done, when it must be done and who will do it.
Basic Business Plan
Why this product/Service?
Is there a market need for this type of business, products or services?
How has the business market been tested?
The Business Owner
How will the Business Start?
How will the Business be Run?
The cost price of my Product/Service will be..
Monthly Running Costs.
How much do I need to buy stock?