Planning for the opening and operating of
a business requires a thorough and realistic foundation. That’s really
the basis for preparing a formal business plan. Experts say that a good
business plan aligns the management team of a firm towards a common set
of goals.
This enables the team or the entrepreneur
to be able to work towards achieving a specific pursuit for the
company. Experts believe that once the vision is on paper, it forces the
entrepreneur to take a thorough look at the feasibility of the
business.
They explain that a business plan can be
likened to a dry run, aimed at seeing if there is a major problem with
the proposed business before losing any money in the business process.
According to experts from the Harvard Business School, a business plan
aims to attract professional investors. They note that these investors
may be those who only have time for a cursory glance at each idea that
crosses their desks, but may pick interest in any business with a decent
plan.
Below are some important points that will help you know if your business plan is good enough, according to experts:
Must address the business purpose
The business plan is not a common thing
in business. Experts say the entrepreneur has to start with whether or
not the plan will achieve its business purpose. They note that some
plans are drawn to get investment, while others are to support loan
applications from financial institutions. These plans are drawn for
special purposes that apply to some business situations. They say almost
all businesses ought to develop management-oriented business plans that
exist to help run the company.
Should have target functions
A business analyst, Mr. Richard Edoko,
says that the business plan used internally by an entrepreneur doesn’t
have to present the company to outsiders. He adds that the plan probably
lives on a network, not on paper.
Experts note that some business plans
have sales objectives, selling an idea, a team, and a market, to
investors. They note that some others have a support objective,
reassuring a lender about risk, usually with assets. According to them, a
plan that may be great at selling the company may be bad at supporting a
loan application, or for managing a company.
Should be realistic
Another feature of a good business plan
is whether it is realistic or it can be implemented. Experts say that
the entrepreneur will not get points for ideas that can’t be
implemented. They note that an excellently researched and well written
business plan for a product that can’t be built is not a good business
plan.
According to them, the plan that requires
millions of naira of investment but doesn’t have a management team that
can get that investment is not a good plan. They further note that a
plan that ignores a fatal flaw is not a good plan, but a bad one that
may ruin the business in the end.
Must be able to define responsibilities clearly
The entrepreneur has to be able to
identify a single person who will be responsible for every significant
task and function. Experts note that a task that doesn’t have an owner
is not likely to be implemented. The entrepreneur can go through a
business plan and look to see whether or not he can recognise a specific
person responsible for implementation at every point.
Clearly highlights assumptions
A good business plan must be able to
highlight assumptions clearly. Experts say this is very important
because business plans are always wrong. They note that business plans
are done by humans, who are guessing the future, and humans guess wrong.
As a result of this, business plans must clearly show assumptions up
front because changed assumptions ought to lead to revised plans. The
entrepreneur must identify assumptions and keep them visible during the
planning process.
When it is easily understood by the entrepreneur
Experts say the plan must be precise and
understandable when left to stand alone. Plans are judged by the
business improvements they cause, and in some sense, by the
implementation they cause. They note that the people in charge of a
business plan have to know and understand the plan.
Should be on point
Edoko notes that every business plan
ought to include tasks, deadlines, dates, forecasts, and budgets. It
must be measurable and should also include metrics. He notes that the
entrepreneur or the team must be able to ask the right questions while
evaluating the plan.
Questions that should be asked include
how to know in the long run if the plan was followed strictly. Also you
should ask how you are to track actual results and compare them against
the plan. You should also be able to find out if you are on plan or not.
Credit: The Punch
