Why write a Business Plan

A good Business Plan will be much more than a set of financial projections and cash flow statement. A good Business Plan will tell the person reading it what the business intends doing -its goals and objectives and detail how it intends doing it in detail. This detail is where many people trying to write a meaningful Business Plan have problems. They cannot articulate how they intend achieving their aims and objectives. One 'Business Plan' we sighted recently (it was prepared with the specific purpose of obtaining funding) and which was written by an accountant, was just a few pages of projections accompanied by a single paragraph of text stating something to the effect, 'Our Business Plan is aggressive and bold'.

To reinforce the confidence of shareholders, owners, government backing, that you have the capacity to manage your business successfully in the future. To present a clear 'business case' to persuade senior executives to support your proposal for developing the business unit for which you are responsible. Business plan establishes objective or standards that facilitate control.
Some reason for writing Business Plan :

• Gives direction and reduces the impact of change
• Reduces uncertainly and clarifies the consequences of the actions
• Minimizes waste and redundancy and sets the standards to facilitate control
• Establishes coordinated effort and gives direction to managers and non managers
• Forces managers to look ahead, anticipate change, consider the impact of change, and develop appropriate responses
• Reduces overlapping and wasteful activities coordination before the fact is likely to uncover waste and redundancy. Further when means and ends are clear, inefficiencies become obvious
• If we are unsure of what are trying to achieve, how can we determine whether we have achieved?
• Further when means and ends are clear, inefficiencies become obvious
  
• Specific objectives are formulated, usually covering a period of years
• These objectives are put into a written document and circulated to organization members
• Specific action programs exist for the achievement of these objectives management has clearly defined the path it wants to take get from where it is now, to where it wants to be
• A significant number of business that do not have a formal plan collapse soon after starting up

Business Planning will benefit people in a range of business activities, both manufacturing and service industries who are responsible for :

• Improving the performance of an existing business
• Prepare a Business Plan for their branch or division
• Launching a new product or service
• Opening a new branch or division
• Commencing a new business
• Presenting a Business Plan to financial institutions or internal funders to raise capital
• Those wishing to sell their business ideas/technology/intellectual property
• Those wishing to sell equity in their business to new partners

The readers of a Business plan is :

• Yourself. To clarify your own thinking about the future. To produce a clear focus for monitoring and controlling future progress
• Your team. To involve your team in determining the future direction of the business and thus to secure their commitment and motivation
• External founders (Banks, venture capitalists, etc). To present a convincing case to secure external funding for the future development of the business
• Internal founders (Senior executives, finance departments, etc). To present a clear 'business case' to persuade senior executives to support your proposal for developing the business unit for which you are responsible
• Shareholders, Owner, Trustees, Boards, Public Servants, Government bodies. To reinforce the confidence of shareholders, owners, government backing that you have the capacity to manage your business successfully in the future
• External Providers. Your bank or financier may require a Business Plan to aid in assessing application for finance. Potential shareholders or backers of your business may require a Business Plan

How many business have a Business Plan? Recent surveys show that only 37% of business in world have a Business Plan. In the small business sector the figure is below 20%

The meaning of a message is not totally controlled by its sender. The receiver is intention is equally valid

What is a Business Plan

A business plan is a document which result from management planning, and should involve the whole organization. It documents a plan to outline specific requirements needed to achieve specific goals and targets. A well structured Business Plan will address specific action programs for the achievement of the aims and objectives of the business enterprise. Planning establishes objectives or standards that facilitate control. If we are unsure of what are trying to achieve, how can we determine whether we have achieved it?

The Business Plan results from deciding in advance what the :

• Vision
• Objectives
• Direction

of the business will be, and how you intend getting there, by when, and who will do what, to contribute to reaching the objectives.

A plan is therefore, predetermined course of action for reaching objectives. Its purpose is to increase the probability of reaching objectives, by reducing the need to make ad hoc decisions when the business is faced with dangers and problems in the future.

• Planning can increase effectiveness (the probability of reaching agreed objectives) and efficiency (the cost of doing so)
• Planning will not guarantee success, but research clearly shows that it increases the probability of succeeding.
• Plans are needed when additional finance is being sought, but their greatest value is as a blueprint or road map for managing growth and change.
• A Business Plan should be structured in such a way as to create a format, that is easily followed and is acceptable to major lending institutions.

The key elements of a Business Plan include :

• A complete review of existing development concepts
• Product and resource base evaluation
• Corporate structure
• Corporate objectives
• Existing marketing technique and financial analysis

The Business Plan should then outline an Action Plan incorporating short and long term goals for growing and developing the business. Most importantly the Business Plan should be a dynamic document which is regularly reviewed and updated - it should not sit in the bookshelf as a space filler!

What is the Philosophy and Vision for your business ??