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Why Its Important To Develop A Business Plan
by Raven Esparot
http://www.ftbbusiness.com
Many people do not really have important it is to develop
a business plan for their business and it often does not
get done because the business owner does not have the skills
or does not have the time. During the technology boom
business plans were frowned upon and indeed the motto
adopted was "Build it and they will come". If you even
attempted to develop a plan people laughed at you and in
some cases many business planners were told "don't come
Monday".
Today after the bubble burst on the technology boom, we
have reverted to once again believe in the fundamentals of
business planning. Develop a strategic plan for the
company. Then take the strategic plan and begin developing
implementation plans that will achieve the strategy that
has been laid out. Develop solid business cases and support
them with well thought out numbers and assumptions that can
withstand the scrutiny of bankers and lenders. After that
all has been done, begin implementation of the various
elements of the plan, and in parallel, retest the strategy
and adjust as necessary.
A business plan contains a description of the product
or service that the business is selling in order to
make money. The Plan also outlines how the product
will be marketed and sold to customers and defines who
those customers are. The plan will include some financial
data including a sales forecast and revenue projections
based on the items you will be selling.
Another important element is estimating all of your costs.
The cost estimates are critical in making decisions about
your business plan and have a critical impact on the future
of your company and the particular success of your project.
Many business people are overly optimistic about revenues
and underestimate expenses. This is part of human nature.
There are ways to assess the sensitivity of the various
cost elements. Some teams will rerun the business plan
economics with assumptions that represent worst case,
likely case and best-case scenarios. Other teams will use
tools that allow you t vary one variable at a time to test
the sensitivity of your plan to that one variable. This
sort of analysis can be quite useful, since you will
quickly find which variables require the most attention
based on the impact they have on the success of your
business plan.
The best advice for business people who are starting up
new business's is to focus on getting the products right,
the marketing right, the delivery and support right and
then bring it all together with a proper business plan that
assesses the strategic goals, the implementation goals and
the economics of the business. Your chances of success will
be greatly improved over the long run.
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