Planning is an essential element of success in business. As the adage goes, “a bad plan is better than no plan at all”. Whilst the statement is a bit of a “tongue in cheek”, the adage does highlight the importance of planning. From a banker’s perspective, it is therefore always important for every small business owner to set out a written business plan in order for his business to achieve any chance or measure of long term success.
When does the process of writing a good business plan begin?
Before one decides to go into business, they first have to conceive an idea for a product or service. This idea must be first written down somewhere. A successful entrepreneur will therefore routinely note down market gaps in products or services. Actively thinking around these gaps will usually trigger ideas about new products and services that the business person can introduce into the market. Writing things down is therefore a good habit, and avoids you forgetting about ideas and opportunities you may have observed in the market.
Why it is important to write a formal business plan?
A formal written down business plan for starting and running your business successfully is essential. You definitely need a written business plan if you are going to seek bank financing or investors for your business. Banks and other investors will not invest in or lend to a small company just to be good or to lend a helping hand. They will invest to make money and they expect to make a lot of money by investing in your business, together with the you of course!!!. They however won’t even consider your business idea or proposal without anything written down.
What are the key elements of a bankable business plan?
A well written business plan will promote the growth of your small business and provide an easy map for you to follow in implementing your business idea. In fact, the business plan should act as a live document that continuously monitors your “work in progress”. This is true even when your business is successful and growing, you should still maintain a current business plan. It is therefore important to review your plan on an ongoing basis to see where things could be going wrong in order to take corrective action. Continuous monitoring also ensures that you can build on the strong points in your business and thereby successfully exploit profit opportunities.
What is the value of prior market research?
Writing a business proposal is hard work and it must be informed by solid market research. Critical information about the market size, customers, suppliers, competitors and financing options etc must be researched upfront as part of the idea generation process alluded above. This information and research is what the business owner will need in order to write a comprehensive and bankable business plan.
If you don’t get your information right, the business will falter. However, if you get all your information correct, don’t spoil the effort by writing a poor business proposal.
It is very easy to fail to impress investors because of because of the language and style in which your proposal is written. Your business plan needs to be clear and easy to read so your audience can concentrate on the key message and see the same opportunities that you are seeing in the market.
In order that your business plan be attractive, it must be original and creative, but the information must nonetheless remain factual. The business plan must tell a compelling story but should be well supported by research.
In the next instalment, we will discuss the key chapters of a sound, well written business plan and how to organise them in a logical informative way.
Clive Mphambela is a Banker. He writes in his capacity as Advocacy Officer for the Bankers Association of Zimbabwe. BAZ expressly invites players in the MSME sector and all other stakeholders to give their valuable comments and feedback related to this article to him on firstname.lastname@example.org or on numbers 04-744686, 0772206913