The point of a business plan

HOW ARE YOU GOING TO RUN YOUR BUSINESS? Nothing questions the flaws or opportunities in your plan more than jotting them down.

If you were to speak to a banker in search of a business loan or a potential investor, the first question they would ask is do you have a business plan? Because of the prerequisite business plan when seeking funding, business planning has been reduced to a boring long document filled with strategies, organisational structures and laborious financial projections that are only significant in regards to capital-raising. Outside of finding money entrepreneurs do not see the use of a business plan. But that is a gross misunderstanding of the point of a business plan.

Essentially it is a plan for your business. It is not a 30-page document; in fact it has nothing to do with the document. The document is only the format used to communicate the plan and emphasis should be given to the word “plan”. In some circles they use the word “strategy” interchangeably but both terms speak to the idea you have on how you are going to run your business. One of the biggest advantages of writing your plan out is that it gives you clarity.

There is nothing that questions the flaws or opportunities of your plan more than jotting them down and reading them back to yourself. Therefore, put pen to paper and in the process decipher if your proposed venture is not little more than a fantasy before sinking your entire life savings into it.

But some entrepreneurs may argue that for them to stand any chance of raising capital, or for their idea to succeed for that matter, a professional business plan is required. Because of that they would rather hire a business consultant to construct one – or worse still, download a sample plan from the internet and change the company name, location and dollars to rands.

Apart from business consultants charging an arm and a leg for a professional business plan, the strategy and proposed implementation is not your own and neither is a downloaded sample business plan. Again, there is a high chance of being found out when funders probe your overly-complicated business plan, which you hardly understand yourself.

Keep it simple. Funders want to know your idea and not an expert’s, because it is you who will be executing the plan. If you have little knowledge on where to begin, you could always download a questionnaire business plan. A questionnaire plan asks specific questions in relation to your business strategy, such as who is your customer and what is your competitive advantage? After answering all the questions you would have created your business plan.