What is a Business Plan?
This is a description or statement that shows a business’ goals and objectives, including a description of the company’s background, its owners or managers and any potential challenges the business may face in achieving those business goals and objectives.
Now, a business plan acts as a guide. A lot of entrepreneurs have their business plans prepared to present to a potential lender, such as a bank, venture capital firm or otherwise. When you have one prepared, it must be able to help convince the lender “why” should they invest in your company. It must show a clear indication to the potential investor, if your business is worth investing in.
There is the popular notion that this type of plan is used only when you are starting a new company. This is not true. Many existing companies may require one if the company wishes to expand, and so, they may need a business plan at that stage to seek investors. The company might be thinking about expanding into new markets, or engage in new product development for example.
If you think that you don’t need investors for your start-up company or existing company, and you have sufficient capital, planning your business is still important to do, and in this case, it can be used as a gauge for you to monitor how far or how near you are in achieving your business goals.
Part of the plan may include a company’s projected financials. This is a crucial section that you must take into consideration. It helps you to answer the main question of “How much in sales do you propose to make monthly? What are your proposed expenses? Who are your competitors in the market or industry?” etc. When your company starts its operations, monitor your sales monthly or even weekly to track your progress. Compare your actual sales to your projected sales in your business plan. Are you breaking even, meeting or even superseding on your sales targets? Are you behind? A business plan can help you to check to see if you are drifting from your proposed targets, so that you can make the necessary changes.
There are many articles, books and templates on business plans. There are a wide variety for you to choose from to suit your company and industry. If you are unsure about preparing one, a business consultant can assist you in that regard. So, get started and happy business planning!