As a financial management group, we are often requested by current and prospective business owners to assist in drafting business plans.
They either need to submit the document to a bank when applying for finance, or they want to realign their business strategy to adapt to a changing marketplace.
In today’s economy, where retrenchments and early retirements are commonplace, the trend is that more and more people become business owners – whether they start their own business or buy one – and they need specialised guidance.
There are two important aspects that one should keep in mind when compiling business plans.
First and foremost, the owner has to be actively involved in the process. It serves no purpose if the owner, our client, invests in a document without buying into the concept first.
The owner has to understand the plan. In fact, our client will give us most of the input – we simply give guidance and facilitate the process.
Secondly, a comprehensive and well drawn up business plan does not guarantee the success of the business. Success depends on how well the plan is being executed.
A business usually starts with an idea – for instance, a novel way of delivering a certain product or service to a market that is prepared to pay for it. The business plan is the proposed process that an owner will follow to achieve this.
Everything starts with a vision. Therefore, incorporate the critical elements that will make the business work in the vision statement – this also forces you to verbalise your dream, or your objectives.
Here is an example: “The Village Deli focuses on organic and creative food to serve to our trendy target market. Most important to us is our financial success, which we believe will be achieved by offering high-quality service and extremely clean, non-greasy food as well as deli products with interesting twists”.
After the vision statement, the other critical elements – such as target market and product – are analysed and broken down. Using the above example, “trendy” may be defined as: “The lonely rich; young healthy hippies; dieting mothers etc”.
Financial success is always the core focus of any business – if not, it would’ve been called a hobby or charity.
Costing of products and services; projections for capital expenditure and other expenses; projections for expected sales; turnover targets in order to reach breakeven point in a certain time and so on are all critical to the financial success of a business and should be included.
Typically, any proper business plan will include a Swot analysis, which is an acronym for the anticipated strengths, weaknesses, opportunities and threats of a business.
Shortlist ideal locations – where do the trendy hang out and how far would they go to find your offerings?
Although I’ve only touched on some points, these should give you an understanding of how a business plan will “force” you to focus on the areas that will dictate eventual success.