The term “business plan” has different meanings to different people. Banks that release their own planning guidelines consider formal business loan applications to be synonymous with business plans. Venture capitalists see them as investment proposals, purely fund raising documents. Corporate managers think of them in terms of departmental budgets and financial forecasts.(Touchie, 2005).
According to Kuratko and Hodgetts (1998), the business plan describes to investors and financial sources all of the events that are likely to affect the proposed venture. Details are required for various projected actions of the venture, with associated revenues and costs outlined. A Business Plan describes a business opportunity. It is like a road map because it tells you what to expect and what alternative routes you can take to arrive at your destination. Planning helps you to work smarter rather than harder. It keeps you future oriented and motivates you to achieve the results you want. Perhaps most importantly, the process of completing a Business Plan enables you to determine what commitment you need to make to the venture (Department of Trade and Economic Development, 2010).
How to write a presentable business plan
Why is Business Plan Important
When you think about what a business plan is your mind probably goes right to the bank and the process of applying for business financing, as that is the most common use for business plans. But if you are creating this valuable tool only as a part of a required financing package, you are overlooking its most important function: planning (Cagan, 2006). Whether you are new to the world of entrepreneurship or a seasoned veteran, a properly crafted business plan can help solidify your vision. And when you are remaking an on-going venture, a written strategy (business plan) can help ensure its success. Taking cognizance of that, there are particular events that spur the need for a full-scale business plan.
According to Cagan (2006), they include the following:
- You plan to launch a new
- Your business has grown
- You want to expand your existing business into new
- You want to add a new product or product
- You are thinking about buying a business
Other reasons why business plan is necessary according to Department of Trade and Economic Development (2010) are to:
- Control future risks
- Prepare for future uncertainty
- Control business environment
- Control business growth
- Avoid sales crises
- Avoid liquidity crises
- Avoid successioncrises
- Ensure people development
- Ensure work space available
- Avoid stock buying cruises
According to Timmons and Spinelli, (2004), developing the business plan is one of the best ways to define the blueprint, strategy, resource, and individual requirements for a new venture. A good business plan must be developed with a view to exploiting the defined opportunity, developing the opportunity and determining the resources required, obtaining those resources and successfully managing the resulting venture (Hisrich, Peters and Shepherd,2008).
Writing Business Plan can be laborious and financially demanding, but it is really worth the trouble. A well writing business plan will enables an entrepreneur to control future risk, prepare for future uncertainty, control business growth, take charge of organizational growth and development. It allows for consistencies in decision-making.
What should a good written Business Plan contain?
- The Business Idea: An outline and description of the product or service and background on the
- The Entrepreneurs: A history of the founders of the business including their skills, abilities and proposed ownership
- Business Objectives: · What the business intends to achieve including long range goals · The advantage of the product or service over existing competitors · The image and character of the business to be developed.
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