Some have described it as the “Bible’ of small and medium enterprises (SMEs), while others just believe it is ‘unimportant’ and therefore ‘overrated’.
A business plan is crucial to the success of any business because it is simply a step-by-step exercise in forward thinking, reveals Small Capital, a Standard Bank practical business guide published recently.
“A sound business plan should contain crucial budgets and cash flow forecasts that will show much profit you can expect your business to make, how much finance you will need and the risk involved,” says the brochure. This, the brochure adds, will help to demonstrate the entrepreneur’s business idea, how he or she wants to implement it and its long term viability.
But for some, a business plan is nothing but a non-sense document that not only takes too much time to put together, but also does not have any impact on the success of a business.
Big mistake, seems to say the brochure. Small Capital seems to insist on the ‘divine’ importance of having a sound business plan that it says will include the following, among others:
- outside funding
- credit from suppliers
- management of your operation and finances
- promotion and marketing of your business
- and the achievement of your goals and objectives.
The brochure slams entrepreneurs who drag their feet to prepare a written document by arguing that they have little time or citing fast-changing trend in the market for a business plan to be useful. It urges potential entrepreneurs to consider the following four core questions before writing their business plans:
1. What service or product does your business provide and what need does it fill?
2. Who are the potential customers for your product and why would they purchase it from you?
3. How will you reach these potential customers?
4. Where will you get the financial resources to start your business?
“Success in business is never automatic. It is not strictly based on luck – although a little never hurts. It depends primarily on the owner’s foresight and organisation,” the Standard Bank business guide says.
“Even then, of course, there are no guarantees. Starting a small business is always risky, and the chance of success is slim. Planning is crucial.”