How to draw up a business plan
Every small business needs a structure to build on
Has the idea of starting your own business ever crossed your mind? These days, jobs are scarce even if you have a matric and a degree. More and more people have to become selfemployed to earn a living.
Although the informal sector is regarded as South Africa’s fastest growing economic sector, it is not always easy to start your own enterprise. But with very hard work and dedication, not to mention good planning, the financial and job satisfaction rewards can be great. If you think you have what it takes, you should perhaps consider the option.
You’re probably wondering where you to start and what you need to know. Starting your own small business takes not only guts, but also requires maximum utilisation of all your talents, knowledge, experience and skills, and most importantly, it needs constructive planning. Many small businesses fail due to the lack of proper planning. An effective business plan is therefore a very important step towards success.
What is a business plan? Draw up a detailed list of every conceivable aspect of your proposed business venture, for example what do you intend doing, what’s your market, where are you going to operate, what equipment is needed, whether the idea is viable, how many people you want to employ and critically, will your product sell? Is there a need for it and will the price be affordable?
Why is the business plan important? For the simple reason that when you apply for financial assistance, you want to convince a financial institution that your idea will make money.
What should be in the business plan? Firstly you must ensure that your business plan is neatly typed and looks professional. Every little aspect must be well explained. Here are few points that must be included in your business plan:
Introduction: Provide an introduction that will stimulate interest in your proposition. Describe the nature of your business venture, your goals and make sure that it is well motivated. You must ensure that all the aspects are covered, such as legal requirements, type of ownership (close corporation or company), location as well as the type of competition expected.
Market research: Write down why your idea will work and be profitable, based on research you have done.
Financial plan: This gives a clear picture of how much you require to get started, what your expenses will be, how much you will have to make before you make a profit (breakeven point), available security, and the financial contribution that you can make.
There are many organisations beside banks that specialise in helping budding entrepreneurs, such as the Small Business Development Corporation. It has a mini-loan programme that provides simple and fast financing up to R5 000. The Get Ahead Foundation has the Stokvel scheme where they lend small amounts of money to small businesses. Ned Enterprise and many more organisations have similar schemes. These organisations will also assist you with advice and many of them offer training on how to become an entrepreneur. Once all these issues are sorted out, you are ready to start!
First of all you will have to find suitable premises (it is worth establishing whether you can operate from home — where permissible, it offers tax advantages and convenience). Remember that the nature of your undertaking will determine your choice of premises. A small factory will, for example, be best situated in an industrial area, while a professional service will be best suited to an office building.
The business should be so situated as to allow your clients easy, convenient access. Consider aspects such as parking, loading and offloading if applicable, and so forth. Business premises are almost without exception leased on a contractual basis, which covers aspects such as the duration of the lease, amount of rental, etcetera. Study the contract carefully before you sign it.
Trade licence: The next step is to obtain a relevant trade licence from the local licensing authority. Trade licences are coupled to the premises and the authorities must first satisfy themselves that the premises comply with all the health and other requirements.
Furnishing and equipment: Most of the time you will have to provide your own furniture and equipment. Again, the type of business will play an important part in your choice of lighting, floors, ceilings, display windows and so on.
Personnel: You will have to decide how many workers will be needed, what the duties and responsibilities of each worker will be, and how much they will be paid. It will be your responsibility to ensure that personnel are well trained and involved in the aims and goals of your undertaking, because they will play a vital role in the success of the business.
Stock: If the nature of your business is trading of consumer goods, you must arrange for your first stock deliveries. Trading stock can be purchased from manufacturers, wholesalers and factory representatives. From the very beginning, ensure that you have a good stock control system.
Publicity: If you can attract the public’s attention when you start a new business, you have a good chance of success. You can use various media such as press advertising, pamphlets, posters, display windows, billboards, radio and television.
Remember: effective planning is the first step.