Entrepreneurs have brilliant ideas that need to translate into successful ventures. but not all of them turn into successful businessmen. Many of them fail to get the required funds even to kick start their businesses for the simple reason that the business plans don’t speak for them. The depth of the plans don’t convince the investors as they think the plans are not unique or they do not take care of market corrections. They don’t detail the risks to the business due to shift in technology, local laws, regulations, macro – micro environmental factors and how to mitigate them.
A Business Plan is an internal document of an enterprise and it does undergo changes to reflect the change in strategy to achieve the top / bottom lines and customer acquisition. It is not to be shared with the larger entrepreneurial community but the founders of successful organisations have articulated their success formula in public. These have immensely benefited budding entrepreneurs to help redefining their business plans.
The purpose of a business plan is not only to raise funds but the essence of it is focussed on attracting customers, partners and key people to the organisation. The investors know that plans do change but they are more interested in how the founders have thought through and foreseen the risks and included the mitigating measures. Their unstinted commitment to that plan would comfort them to stay invested in the ventures.
There are many components in a business plan. Some of the important aspects are: – the mission and vision of the organisation – details of the product or service on offer. – the competitors and their offerings. – the differentiators of the product or service when compared with that of competitors. – the customer segments that is going to buy the product or service. – How do we reach the market? – what is the structure of the marketing organisation? – what is the pricing and cost structure of the product? – what would be the cash flow for the first 3 years? – what is the capital required – Own investments Vs external investments? – the break even point – year & month? – the staffing plan – the anticipated Organisational risks, how to mitigate them, work around plan ……….
Every point has to be written with details and the business plan needs to be a word document that runs into pages depending on how elaborate the promoters are able to articulate. A power point presentation will never work for a Business plan. Anybody who joins the leadership team should be able to get a complete understanding of the business by reading that document. Over the first few quarters or years, the business may run into rough weathers due to unforeseen road blocks and the plan would need further iterations for course correction and execution.
In short, a good business plan not only gets the funds but a good document to review at periodical intervals to ascertain how the business stays focussed on the growth of the enterprise.
THE PULSE by Sivakumar Gopal 