Why write a business plan?
Write a business plan can seem tedious work. But in any case, it will be no time wasting. The business plan will allow you to check the profitability of your project (A), calculate your financing needs (B) and especially trying to convince investors and your banker.
A. Check the profitability of its project
When you are about to take a trip, the first thing you are going to check is to make sure the path you want to take will allow you to get to your destination. You also will check whether your fuel is sufficient. Your GPS is unable to calculate and offer you a ride with fewer plugs without first knowing your destination. The business plan is also used for this. He will let you know if the strategy you have chosen to follow you allow or not to get closer to the success of your project.
B. Calculate funding needs
Calculate your financing needs will help you avoid unpleasant surprises cash. To do this, after making your statement of cash flows, you should watch how much you need to do to stay in the red …
C. To convince investors and his banker
Your investors and your banker will await you on one point that will determine their involvement in your adventure: the return on investment.
When you start your business, the first months are often negative because you have to invest to generate sales that only occur later.
Facing your investors and your banker, then you have to give arguments proving to them that your project will pay off in more or less long term. They then ask you to highlight a key ratio.
2. It’s not that accounting
However, contrary to popular belief, the business plan is not just accounting, it is also to do a market study (A), which will allow you to set up a coherent action plan (B ). Most people who engage in entrepreneurship also forget one of the key points of the project’s success is consistency between Man Project-Team (C). The business plan includes this given him.
A. Make market research
What would be the point of sale of audio cassettes in the era where the mp3 and iTunes are part of everyday people? That would earn you sell ski equipment in a country where it never snows. To succeed in business, one must respect the balance between supply and demand. It is useless to offer products which will never have takers. If nothing comes out of your stocks, nothing enters your boxes and your project will run to its failure. The business plan will allow you to study the market to identify their needs and prevent you from thinking instead of your customers.
B. Develop a coherent action plan
The action plan is the cornerstone of your business plan, it will appear in a table allowing you to itemize all possible actions. Your action plan will be a tool that let you attach month by month your marketing objectives, sales, HR, and finance. To attract potential partners, it will be in your interest that your action plan is consistent. The consistency of your actions give credibility to your project in the eyes of bankers.
C. Check the consistency-man project team
Never forget one thing: investors seek above all to invest in an entrepreneur or entrepreneurial team. Therefore, you will demonstrate your business plan, the consistency between the project team and the founder. Why is this the right team to carry out the project? What past experiences show that you reach your goals? You know your market?
3. The business plan: control risks
Ultimately, writing a business plan you are looking to reassure investors and bankers. You must be able to have a critical look at your project and present potential risks based on your business (A) and to provide for correction planes (B)
A. Assess risks
In entrepreneurship, zero risk does not exist. The advantage of writing the business plan is that you will be able to identify any more or less predictable risks that could affect the outcome of your project. These risks may be: Difficulty in recruiting qualified staff quickly longer payment Delays Paying the Price An increase in the cost of raw materials Etc
B. Provide corrective plans
In trying to avoid a risk, you may create more. You have different organizational risk inventory and you decide to hire someone else. Except that without knowing you have just created another financial risk. This is where the business plan will help you avoid the worst. The business plan will help you develop thinking criteria allowing you to correct your course of action without you away from your goal. The aim is to identify risks and propose actions if the identified risk occurs.
