Is your business plan working for you?
by Keith Gooden
You had this BIG idea, which you thought would bring you millions of dollars if only you could get a business started and sell the product to the world. Without hesitation, you went ahead and register your company and started selling your novel product or service. The only thing is you did not complete your homework, in terms of finding out if this business is a viable one, or if there are sufficient customers who can afford to buy your product or service in the market in which you decide to sell it. You did not think that this ground-work was necessary, so you forged ahead with your plan to “open your business”. In your haste you forgot to complete one of the fundamental steps of starting any business. You forgot to complete a Business Plan. This like the “blueprint” to building or starting your business. You would not attempt to build a house without the plans and the same is true to starting a business.
This example seems simplistic, but it has happened in so many instances. Many of us would not build a new home without first drafting up the “blueprint” of what the home will look like. You would want to know where the kitchen will be placed, how many bathrooms you will have and where they will be placed in the house, how many bedrooms and where they will be placed. You would want to have a clear picture of what your new home is going to look like before it is completed. In the same way, your Business Plan will give you an idea of what your business will look like before you actually get it launched.
You want to identify each competitor, what marketing strategy you will use to gain market share, how you would price your products versus the competitors and how will you promote your product or service to the target customers.
Based on a recent survey by the U.S. Bureau of the Census, Bureau of labor Statistics and the U.S. Department of Commerce, there were more than 25.8 million small businesses in the United States in 2005, small businesses represents half of all private sector employees, pay more than 45 percentage of total U.S. payroll, are employers of 41 percent of high tech workers (such as scientists, engineers and computer workers), and are 53 percent home-based and 3 percent franchises. It also states that two-thirds of all new small businesses survive at least two years and 44 percent survive at least four years. So you can see from the statistics that small businesses have played and will continue to play an integral role in the growth of the US economy. But while these statistics show us the value that small business plays in the economy, it also enlightens us to take proper caution and preparation before starting one. Because of the high failure rate of small businesses, it is imperative that entrepreneurs get the proper assistance before moving ahead with launching their business. It would be unwise to move ahead with starting a business without proper help and assistance from business consultants.
Business consultants can steer someone who wishes to start a business in the right direction, giving them guidance into financial, management, marketing, sales, operations and budget planning. The business consultants can also play a key role in helping the entrepreneur with the structuring and development of a strong business plan that can be used in securing startup financing and future expansion. Again, the consultants bring to the table a wealth of experiences that he/she can share with the entrepreneur in the development of the business plan. The consultant can act as a guide, a coach and a mentor to the business owner.
There are key questions that must be answered before moving ahead with your Business plan. The plan must be able to answer which business you will be in? What are your critical success factors? What are the company’s goals? What are the company’s strengths and weaknesses? How are your products different from the competition? Who will make up your customer base (direct and ultimate end-users)? What is the size, maturity, and competitive nature of the business sector or industry? What are barriers to entry and growth? What is the industry financial position and performance? What are trends in your target market? And finally who are members of your management team?
These are just many of the questions that should be answered in your business plan. Certainly, there are many more areas and questions of the business plan that I have not touched on here, but clearly this gives you an idea of how to go about structuring your plan. So having answers to these and many more questions in your business plan will help you to develop a strong plan that is fit for securing financing.
To help in securing financing, it is important to have a clear idea of the amount of money needed for your business, for what and for how long. The strengths or weaknesses of your management team cannot be overstated when it comes down to securing investment or financing. A mediocre product with a great management team will always receive favorable responses from financial institutions, compared to a great product with a weak management team. Additionally, a well written Business Plan will almost always guarantee you that investors will look at your request favorably.
Make sure that your business plan is working for you. Use it as an operational tool, financial tool and use it as a plan for future growth. In short, do not shelve it once the business has started, but use it for your long term strategic planning.
Keith Gooden is a business advisor who works with small to medium size businesses and focuses in the areas of sales, marketing, strategic planning, customer service, personnel training/management and business operations. You can reach him by e-mail at keith@ecardcorporation.com |
