Planning about your business is a necessary process to undertake before, during and after start up. The business venture could be a fresh proposed start-up, a new one developing within an existing corporation, a new joint-venture, or anynew organizational or business project for as long as it is purposely to convert action into results. As the backbone of any enterprise, it is very essential for an entrepreneur to ask him or herself why he needs a business plan. An axiom says if you fail to plan, then you have planned to fail. A business plan serves as:
iii.i. Road Map/Guide For The Business: It is not everyone that starts a business with a plan but it is better to have one to guide one. It guides the entrepreneur through the various phases of his business. Note that i t is not a static document that you write once and put away. It should be simply taken as a guide or checklist of questions that constantly need to be attended to at every stage of gestation, growth, maturity and decline of the business.
iii.ii. Assurance of potentiality: The headings in a business plan will reassure all that the venture will work. The plan helps to clarify the entrepreneurs thinking and demonstrates his commitment to carry on as planned. It also identifies where he/she intends to get to and how to get there. This will also convince them that the tools, talent and team to make your plan work are already available.
iii.iii. Define a Business: It helps to identify the business, its objectives/goals and programmes that must be achieved.
iii.iv. Serves as Résumé for the Business: This happens when there is the need for communications to attract more investments, loans and profit potentials of the business.
iii.v. Regular Business Review and Course Corrections: The business plan is your regular reference to ensure you stay focused on its objectives. It will need to be constantly reviewed as the business develops. It provides the chance to focus one’s mind on how one intends to run the business and to identify early on any areas or issues that might have been forgotten or neglected.
iii.vi. Review Current Progress Against The Initial Forecast: The progress of the business shall easily be feasible against the earlier forecasts. This makes any review or necessary adjustments to get it back on track possible. Having a clearly presented business plan document will also make it easier for any specialist support needed.
iii.vii. Support For A Loan Application Or Raise Equity Funding: Whenever a business is seeking fund from a bankers, venture capitalist or investor, a comprehensive business plan that is clear, focused, realistic and contains sound business reasoning shall be a necessary requirement to show that it is worthy of financial support. Banks are more favorably disposed to applications with a business plan whenever it is approached for capital to expand.
iii.viii. Defines Agreements Between Partners: It helps to define agreements, shares, etc between partners, shareholders and other stakeholders in the business.
iii.ix. Proper Allocation of Resources: It helps to allocate resources properly, handle unforeseen complications and thereby assist in making adequate business decisions.
iii.x. Sets a Value on a Business For Sale or Other Legal Purposes: Whenever the business is placed on sale, it helps to set a value for it. This is also required at most times for legal purposes.
