Are you failing to plan, or planning to fail?
A business plan is crucial to the success of any business. This plan is simply a step-by-step exercise in forward thinking.
A sound business plan should contain crucial budgets and cash flow forecasts that show how much profit you expect your business to make, how much finance you need and the risk involved. This helps to demonstrate your business idea, how you want to implement it and the long-term viability thereof.
The importance of a comprehensive, well thought-out business plan cannot be overemphasized. Much hinges on it: outside funding, credit from suppliers, management of your operation and finances, promotion and marketing of your business, and achievement of your goals and objectives.
Surprisingly, many entrepreneurs drag their feet when it comes to preparing a written document. They argue that they don’t have enough time, or that the market changes too fast for a business plan to be useful. But just as a builder won’t begin construction without a blueprint, eager business owners shouldn’t rush into new ventures without a business plan. A business plan is your roadmap to success.
Before you begin writing your business plan,
consider five core questions:
What service or product does your business
provide and what need does it fill?
Who are the potential customers for your product
or service and why would they purchase it from you?
How will you reach these potential customers?
Where will you get the financial resources to
start your business?
Who are your competitors? Establish who else is operating in your chosen market and what products and services compete with yours. Know them, understand them, and improve upon them.
Your business plan should do the following:
Identify the target market by defining your audience, the size and scope of the market, details about competitors, your pricing and marketing strategies.
Explain the benefits of your product or service, how it is unique and its appeal to customers. Include details of how your company’s location will benefit your business.
Show that you have effective management – people who not only have the necessary business skills, but who also work well together.
Develop forecasts of relevant business trends over the next three to five years. Don’t overestimate potential sales. Allow for the best, worst and most likely scenarios.
Highlight current and potential problems and show how they will be overcome. This helps you avoid problems and boosts your credibility with investors and lenders.
Include a capital equipment list, a balance sheet, income statements or projections for three years, cash flow statements, break-even analyses and loan applications.
Reasons why small businesses fail
1. Inadequate business planning
2. Insufficient capital
3. Lack of management experience
4. Poor location
5. Poor inventory and cash flow management
6. Over-investment in fixed assets
7. Poor credit arrangements
8. Personal use of business funds
9. Competition or lack of market knowledge
10. Low sales/not pricing properly
By:KINGSLEY OPPONG –SEKUM/Ghanadailies