Business Planning
Planning to successfully commercialise your idea should involve a number of planning steps. The preparation of a business plan is virtually a mandatory requirement for the entrepreneur in order to develop and further the commercialisation of their idea.
Conversely, it is a virtual given that potential funders including angels and venture capitalists will ask to see the business plan before meeting with you.
Developing a business plan will force you to think through some important issues that you may not otherwise consider - a beneficial process. Your plan will become a valuable tool as you set out to raise money for your business and it will provide milestones in your control process to gauge your success by measuring results against aims and objectives.
A business plan should be much more than a collection of financial statements and cash flow projections. The business plan should tell the person reading it how you are going to obtain strong results including sustained growth and profits, loyal customers and a high performing workforce.
To do this, your business plan will need to address many elements of the business especially sales and marketing as well as people (human resources), processes, customers (forming relationships), business strategies, goal setting, brand building, leadership and finance. Your business plan should address how your business intends creating a distinct and profitable niche in its market place utilising your unique selling proposition.
A favourite topic of ours in regard to business planning is how some ‘business professionals’ place huge emphasis on a budget and the associated cash flow as a key element of their business plan preparation while completely ignoring how the business will actually create these budgeted cash flows. These ‘business professionals’ apparently do not understand (and have no knowledge of) people, processes, customers, business strategies, sales, marketing, brand building and leadership.
A business plan should be a dynamic document and not sit on the shelf after it has been finalised. Many people fall into the trap of preparing a business plan and after some initial use and reference to it, the business plan is filed away and never referred to again. Your business plan should be constantly referred to and constantly updated, taking into account market forces and the constant change involved in most industries.
And remember, a business plan should be like a laser - not a shotgun and someone needs to be responsible for driving the business plan.
· What is planned
· Who will do it
· When it will be done
· How much it will cost
WHAT, WHO, WHEN, HOW, are key words in all planning decisions.
Planning framework. Business Planning is a process and can be broken down into steps:
· Establish objectives
· Develop basic assumptions or premises
· Identify alternative courses of action
· Evaluate alternative courses of action
· Implement the plan
Writing a business plan to appeal to investors
Any business plan pitched at potential investors must:
· Explain why there is a market for the product or service.
· Describe the core technology and its competitive advantage.
· Explain how the product or service will be mass produced.
· Detail how the product or service will be marketed, distributed and sold.
· Explain how sales targets will be reached.
· Detail the experience, skills and qualifications of senior management.
· Detail how the company’s intellectual property will be protected.
· Identify key milestones to be achieved, by item, time, cost and the person responsible.
· Identify key risks and how those risks have been addressed.
· Provide a one or two page executive summary.
A business plan is a requirement for all types of organisations - manufacturing, wholesale, service, non-profit, charity, government, etc.
Business planning can prove to be a valuable process. It is undeniably hard work but ultimately exceptionally rewarding. It will cleanse and refocus your thinking about business and thus help you develop your approach to it. In undertaking Business Planning you will learn a lot more about your business and thus acquire more confidence in how to manage it.
Many business plans are completed by unskilled entrepreneurs who repeat various content items under different headings. For example, in the marketing section, rather than defining the size and key elements of the market, they repeat information relating to sales strategies or projections. Unfortunately, seasoned investors often pass over such documents with the belief that if the team can't understand key elements of a business plan, they'll probably not be great at developing a business.
Without a business plan you can only react to events, and as such your achievements will be limited. A business plan helps you focus on the future and will assist in identifying a clear course of action to lead you there.
The thinking process is quite straightforward. It starts with the conceptualisation of a vision and then moves through an iterative cycle of review and analysis to the establishment of strategic priority objectives supported by detailed projections. The iterative cycle is simply a matter of analysing and clarifying your projections for the future and, to ensure feasibility, comparing these with an analysis of the current situation and recent performance.
Before you embark on the process of preparing a business plan you need to determine the purpose of the plan and who it is aimed at and being written for.
