Small business owners don’t put too much effort on making business plans. We mostly look for making one as a result of a lender requirement. We never wonder why big lender ask for one. Here we try to explain the purpose of a business plan any why we need on and trust me the scope is way larger than a just a lender requirement.
A business plan is a very important strategic tool for entrepreneurs as it not only helps them to focus on achieving the target but also layout a clear pathway to get there. If the direction is clear then it makes it easier for them to achieve both short-term and long-term objectives. The efficacy of a business plan is determined by a few qualities that need to be present in order for it to be feasible.
A business plan should have a detailed description about the scope and specifications of its products and services. If it doesn’t fit a business need, it probably won’t work. It cannot be a generic piece of writing, rather it needs to be a thorough outline of why the business is being set up in the first place. It should further emphasize on how it would be executed. The most important part comes when numbers are added in the plan. Even though they are tentative, they still need to be realistic. Bankers and other financial experts review the viability of a plan based on the return on investment. In order for it to be effective, it should include an extensive market research that identifies its internal and external influences. The opportunities and threats from the competitors, their market share and the variety of the products they plan to produce would help in making a realistic business plan. Market segmentation should be very clear so the strategies can be further devised to fit the target audience.
The second important measure of good or bad business plan is the factor of realism. The plan that requires millions of dollars of investment but lacks a capable management team that can get that investment is not a good plan. It’s often said that only things that get measured get achieved, therefore, it is essential for the business plan to be specific. If the plan is clearly communicated, it is very likely that there will be less confusion so the results can be easily tracked. A task that doesn’t have an owner isn’t likely to be implemented, which is why every business plan ought to include tasks, deadlines, dates, forecasts, budgets, and metrics against a person who carries out all these responsibilities. A good business plan should be able to clearly identify assumptions because changed assumptions ought to lead to revised plans. No business plan is good if it’s static and rigid as planning doesn’t mean predicting the future once and religiously following it regardless of the circumstances. It takes a process of systematic review and course correction to make a good business plan. At Ali Syed CPA we aim to equip you to devise a realistic quality plan that not only holds market viability but also financial feasibility.