TODAY we look at a very important document that usually acts as a road map prior to the setting up of a business or to the already existing one to enhance its growth. This business document is referred to as a business plan.
Most entrepreneurs, who have prepared this document, have done so to seek financial assistance from the financial institutions or as a requisite from outsiders who for one reason or the other request for such a document.
In this case, the business plan is prepared to suit that occasion.
Today in this column, I want to outline the importance of this document and the reason it should be prepared, especially at the time the business is just being conceived as an idea.
A business plan is a foresight of what a business can turn out to be, once it is implemented by those contemplating of starting a new one.
A business plan constitutes thoughts put down on a piece of paper outlining the full idea of what a business would be like once it is enforced by the entrepreneur.
In short, it becomes as a road map to guide a business owner on the journey of doing business.
This is the reason as to why earlier on, we heard that a business plan must not only be prepared in a situation where business owners seek financial assistance from the lenders.
A business plan idea when being formulated on paper must come from the one who is formulating a business and the thoughts must only turn to technical experts who are tasked to put down the idea on paper in a professional manner.
In my experience of interaction with Small and Medium Enterprises (SMEs). I have witnessed where business owners engage experts to write business plans for their businesses with little participation from them, just because they want to get loans from the banks and once such purposes are achieved, the papers are put elsewhere to gather dust.
A well thought out, structured and workable business plan is a very important document to the entrepreneur in the sense that it will give a clear direction and can be used as a tool to measure progress.
It may be used to apply resources in a more sustainable, efficient and effective way.
And because of the above, it becomes obvious when the business intends to apply for financial assistance to turn the already well-thought out prepared document to any lender to consider it.
A business plan when prepared broadens the scope of understanding of a business and the scope is understood from all angles of the stages of business such as the full details of a business, its business background review, the nature of activities it will be involved in, its business market analysis, business strategy and implementation, the management team, its financial plan, the project cost etc.
A well researched business plan will give the business owner direction in which the business will go not forgetting forecasting the competition and the challenges it will face.
It will also outline the difficulties it will face in obtaining its market share and the targeted major customers.
The major suppliers of the raw materials in case of the manufacturing firm or supplier of the products in case of the trading business.
However, a business to take off must be backed by finances. For this reason, a business plan must have a component of financial backing pointing out the source of such financial backing whether it is borrowed capital or capital pumped by the business owners or both.
It is important to note that most successful businesses have survived with the combination of own and borrowed capital.
Last week, I walked in a supermarket which was just opened and when I analysed its business structure, I was impressed and the only thing that came to my mind was that it was a well thought plan of arrangement and I could see how the customers walked in with confidence to buy the products and I forecast the output of more sales in future.
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