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Category: ENTREPRENEURSHIP, The Entrepreneur

Is the business plan still a necessary document?
Written by Tendai Tambudze
21 January 2013

The value of a business plan is often debated amongst entrepreneurs. Some will tell you that a business never goes according to plan and that makes the entire exercise of doing a business plan a waste of time. Others have benefitted from drawing up a plan and find themselves constantly modifying it as the business evolves.

Do you really need a business plan?

The short answer to this question is yes! Starting a business is something most people have considered at some point. The process of establishing and growing a successful business can seem like a daunting undertaking, but when broken down into small actionable steps – is highly achievable. A business plan provides a roadmap to starting and running business.  As a pitching tool, the business plan is of obvious benefit to potential investors who will demand to see the facts and figures. As a thinking and analytical tool, the business plan is critical for the purpose of guiding the entrepreneur through the process of researching and establishing their business.

What needs to go in the business plan?

As an initial starting point, the traditional business plan should cover the following areas.

  1. Executive Summary: Write this last. It’s just a page or two of highlights.
  2. Company Description: Legal establishment, history, start-up plans, etc.
  3. Product or Service: Describe what you’re selling. Focus on customer benefits.
  4. Market Analysis: You need to know your market, customer needs, where they are, how to reach them, etc.
  5. Strategy and Implementation: Be specific. Include management responsibilities with dates and budgets. Make sure you can track results.
  6. Web Plan Summary: For e-commerce, include discussion of website, development costs, operations, sales and marketing strategies.
  7. Management Team: Describe the organization and the key management team members.
  8. Financial Analysis: Make sure to include at the very least your projected Profit and Loss and cash tables.

This is a trusted template that will be a hit with the investors and provide the entrepreneur with a way to do thorough baseline research and projections.  Investors are looking for a plan which shows the entrepreneur has thoroughly understood and researched the business and indentified all potential challenges. To gain the most benefit from this, it should be approached as a serious exercise and not just a matter of ticking boxes. Giving systematic attention to each section will help the entrepreneur think about factors they may not have considered and have a plan of action for each aspect of the business. Time and energy spent at this stage dealing with these issues will prevent potential problems in the future.

For more detailed information on the layout of a business plan visit this page.

How else can you do it?

After the initial plan is drawn up and the business starts up, what actually happens next is anybody’s guess. At this point the business plan can evolve and take up many forms as the business grows. The plan could effectively become a one pager addressing immediate issues, written as a series of bullet points. It could exist on a white board as a block of diagrams and post-its. It could even become a pictorial vision board. Once the initial purpose of the business plan as a tool to guide and inspire has been fulfilled, constant modifications will be required.

In this case it is up to the entrepreneur to find the best method for mapping their business.  There are no rules as to how you must capture and perfect business ideas. At the end of the month or year, all the business activities will need to be formally recorded and accounted for, but do not let this damp your creativity or restrict the way you strategise.

What happens if the business does not go according to plan?

If the cash or sales projections prove to be wrong over time that does not matter. This just shows you what works and what doesn’t work. At the end of the day, a business plan forces the entrepreneur to test and validate their ideas and business models. 

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