Consider this situation for a minute; you want to start a new business or expand your already existing business. You have a very brilliant business idea about a new product, a fantastic attitude and an entrepreneurial spirit, so you walk to your banker. You start a discussion based on your new idea. She listens attentively to you for a long while and seems very interested in asking you very inquisitive questions and encouraging you to go on.
Suddenly she interrupts you and says, “This is a very great business idea, but where is your business plan?” You sit there stunned and ask her, “Why do I need a business plan when you already understand everything I have said”. Then she goes on to say, “I have understood all that you have said about your product. But I still need the business plan to convince myself thoroughly of your business idea, to know if you have researched the market extensively to know your target market, how you will communicate with them, how much funding you will need, how you will use the funds and pay us back among a host of other details”. Then you sit there silently bewildered by the task ahead of you and wonder you will be able to come up with a business plan to satisfy all her curiosities about your business.
Many people who wish to be entrepreneurs face this problem constantly. There are people with brilliant ideas who want to plunge into business without having developed a business plan. It is to help people like this that the painstaking process of developing this book was undertaken. This book will help you understand the concept of a business plan in very simple terms and show you how by yourself, you can put your plan together.
This book is to help entrepreneurs stem the tide of the large numbers of newly established businesses that collapse within the first few years of establishment. This occurs because entrepreneurs are unable to foresee challenges that their businesses come up against, leading to their collapse. Having undergone the process of anticipating the occurrence of these phenomena, a business plan provides the opportunities to strategize to mitigate their consequences or avoid them altogether. It is to provide these benefits of writing a business plan that this book exists.
This book is in three parts, narrative, samples and financial projections. The narrative is the body of the business plan and contains different questions divided into several sections. Work through the chapters in any order that you like, except for the Executive Summary, which you should do last. Skip any questions that do not apply to your business. After answering the relevant questions, you will have a collection of small essays on the various sections. Put all of them together into a flowing narrative of several paragraphs to form your business plan.
The part of financial forecasting teaches you how to develop your financial projections. With your basic knowledge in accounting and Excel, follow the explanatory notes, and you will end up with very comprehensive financial projections that you can present to any prospective investor.
The real value of doing a business plan is not in having the finished plan but in the process of researching and thinking about your business in a systematic way. The act of planning helps you think through your business idea thoroughly, study and research when you are not sure of the facts and look at your idea critically. It takes time but avoids costly mistakes later. It typically takes several weeks to complete a good plan. Most of that time is spent on researching and rethinking your ideas and assumptions.
I understand that your business may be service-oriented. However, “product” has been used to refer to “service” just for the sake of convenience. Additionally, I assume that you will be dealing with just a single product or service in your business; thus, do not be confused if your business involves more than one product or service amidst the constant references to “product” in this book. Understanding the concept is most important.
Millions of people worldwide look at the very successful entrepreneurs we can think of and dream of becoming like them. They have aspirations deep in their hearts of also starting their businesses and being their bosses. They harbour these aspirations and seek opportunities to manifest them by taking initiatives to identify business opportunities and investing hard-to-come-by funds to start businesses. They hope that they will be owners of successful businesses within a few years that will propel them to the heights of success and make their entrepreneurial dreams come true.
Since it is a fact that true career happiness lies in the freedom of doing the work we love, the work that is based on our hobbies and which we do effortlessly, there is no guarantee that we will succeed if we don’t take specific elementary steps. If we don’t do certain basic things that will bring to fruition our dreams of being successful entrepreneurs, we will not reach the heights of success we long for.
There is an old cliché that many people spend a lot more time planning weekends, vacations, weddings and parties than designing their own lives. The same is true for businesses. Many people do not spend time planning their businesses before jumping headlong into the sea of uncertainty, which is the business world. They start their businesses based solely on their emotions, enthusiasm, and optimism to realize a short while down the line that their businesses have sunk. The cost of business failures is unimaginable as it goes beyond financial to most often emotional and, crucially, sometimes psychologically destabilizing would-be entrepreneurs.
The only sure way to avoid all this turmoil is to write a successful business plan.
I’m sure you are wondering what a business plan is. Don’t worry; I will explain it to you in short words to fully understand what I mean.
Before the construction of any building, architects draw out what the building should look like. Based on what they have envisioned the business to be, they meticulously put their pencils, rulers, and measurement devices to draw a plan for the building. After they have successfully done this, building engineers go about the arduous task of construction based on the plan, which is made easier because they have a pictorial representation of what the building should like besides the dimensions needed for the different regions of the building.
In the same vein with you, let’s assume you want to start a business selling computers. Based on your idea for the business, you should be able to determine the type of computers you wish to sell, the brand of computers, the individuals to whom you want to sell these computers, determine why exactly you think these individuals need your computers, know how much these individuals will pay for your computers, understand where they are already getting their supply of computers from, know how much you will need to start the business, know how many computers you will need to sell at the end of every month to meet your financial obligations, understand at every point in time whether you are on course with being successful with your business or not. Once you have figured all these out on paper, you would have developed an effective business plan that will prove to any investor that you know what you are about and have thoroughly charted out the course of success. Once you have this business plan in hand as well, you will be able to properly run the business as you would have had specific targets to meet as enumerated in your plan. When you are not meeting these targets, it is hard to fulfil your financial obligations, and that is where the pressure of having your business fail will build up.
This book teaches you how to…
This book is in two parts being the narrative section and the financial forecasting section. The narrative is the body of the business plan and contains more than 200 different questions divided into several sections. Work through the sections in any order you like, except for the Executive Summary, which you should do last. Skip any questions that do not apply to your business.
When you have finished answering all the questions, you will have a collection of small essays on each section of the business plan. What you have to do is to put all of these together into a flowing narrative in several paragraphs to form your business plan as is done in the sample business plans in the book.
The financial forecasting chapter guides how to develop your financial projections. With your basic knowledge in accounting and Excel, follow the explanatory notes provided and you will end up with very comprehensive financial projections that you can present to any prospective investor.
The real value of doing a business plan is not in having the finished plan in hand but in the process of researching and thinking about your business in a systematic way. The act of planning helps you to think through your business idea thoroughly, to study and research when you are not sure of the facts and to look at your ideas critically. It takes time but avoids costly, perhaps disastrous, mistakes later.
It typically takes several weeks to complete a good plan. Most of that time is spent on researching and rethinking your ideas and assumptions. But then, that is the value of the process. So make time to do the job properly. Those who do, never regret the effort.
Finally, be sure to keep notes on your sources of information and the assumptions underlying your financial data.
The book has the following very interesting features:
Over 200 different questions on all areas of your business. This will give you the benefit of being able to think through every area of your business.
Things about your business you may not have thought about will be brought to your immediate attention. The explanations have been made very basic so the highest novice in accounting will be able to do this.
A step-by-step guide to developing your financial projections. With these books, you don’t need to be an expert in financial accounting to develop your own set of financial projections.
All you will need is your Microsoft Excel spreadsheet and you will be on your way to developing your financial projections without the help of accountants who will charge you so much money for something you could have done easily yourself.