Making a Business Work
Making a Business Work
As the old business adage goes "people who fail to plan - plan to fail".
A business plan is a document that lists all the factors that may have an impact on the operation, management and success of your business. It might appear to you that you have a good idea of what is involved, but it isn't until you sit down and list the possible ramifications of changes in market conditions, that you will appreciate this extra level of planning.
A business plan can be a document that puts down your ideas and converts them into reality. It may also help establish your business' credentials for obtaining finance or investment partners.
When writing a business plan you should consider:
- Benefits of a written business plan, and
- Need for a written business plan.
Benefits of a written Business Plan
Everyone who opens a business has a plan no matter how informal. Hopefully, you will at least have worked out whether you can make a living from the business, as you will probably be giving up a regular income for one that is not so regular.
At some point you will need to communicate your plan to others, such as suppliers, professional advisors, and perhaps a financier from whom you wish to obtain funding. Having a written plan is an essential communication tool, since it's not practical to explain your operations in person each time someone needs to know who you are and what you are doing. Creating a written business plan can help ensure you haven't missed any significant factors that may have a detrimental effect on your new business.
A written plan serves as:
- a reality check - forcing you to consider all pertinent factors
- your business resumé - important when applying for finance or attracting partners
- a business timetable - for all the activities of your company
- a means of tracking progress - on whether your goals and ambitions are met
Need for a written Business Plan
Making a business plan is quite a significant exercise. If you're just starting out in business, the time it takes to create the first plan will be more than repaid by the insight you gain. If you're in business already but have never created a business plan, you'll be in a much better position to assess the opportunities and risks that accompany any new directions you may be considering.
A business plan is worthwhile if you are:
- Starting a new business
- Expanding your business
- Launching a new product
- Expanding into a new market
- Acquiring a new business
Starting a new business
Assuming that you have what it takes to start a business from scratch and you're certain you want to proceed, then a business plan will demonstrate whether your idea is feasible or not. It is better to find out before you start, rather than after you've signed the lease and printed the stationery.
If you are starting a new business from scratch your plan will be based on assumptions regarding costs, labour, the number of potential customers, pricing, and many other factors. This process will help you work logically through all eventualities and provide you with more insight into your proposed business.
Expanding your business
If your business is growing, a plan will help you work out where the opportunities and pitfalls lie. There might be economies of scale or outsourcing opportunities to explore.
Launching a new product
Launching a new product is definitely a time when you'll want to create a business plan. Acquiring resources and the product roll out timetable may have to be incorporated into the overall plan.
Expanding into a new market
To successfully handle expansion into a new market, it is essential that you plan for it. In order to reach most new markets, you will have to face many of the same issues that you addressed when you first went into business but you'll have more to do and only the same number of hours in the day to do it.
Acquiring a new business
A business plan is the perfect tool to use when you assess whether you should buy a business. In fact, many sellers will have created a business profile to fully acquaint you with their business (but probably not its shortcomings). You can use this as a starting point for creating your own plan for the future.
If you are thinking of buying a franchise or incorporating your existing business into a franchise group, you should consider whether the benefits outweigh the associated costs and restrictions. A plan is an excellent tool for creating these comparisons.