Prepare thy work without, and make it fit for thyself in the field; and afterwards build thine house “ – Proverbs 24:27
Planning is bringing the future into the present so that you can do something about it now – Alan Lakein
Failing to plan is planning to fail. While you can start a business without a plan, you can hardly attract serious investors without a business plan. A plan is a roadmap that indicates the various points and processes that the project would go through. A plan allows a potential investor to know the end of the business from the beginning because it gives a detailed analysis of what to expect in the journey of the enterprise. Every business plan is like the prophecy of the business. It is what makes a potential investor literally stand at the beginning to view the end. God the Maker of all things is a planner. He scheduled the second coming of Christ even before His first coming!
After you have done the things identified in the two previous editions of this column, to take your business to the next level, you may need investors if you discover that your current financial capacity cannot take you beyond that point.
Sometimes, I chuckle to myself when I hear budding entrepreneurs grumble about how difficult it is to get financing especially from financial institutions. When I ask for the details of that business enunciated through a detailed plan, most of them have no clue. Nobody, no matter how rich, wants to have a feeling that he is throwing money away. Those who know the value of money do not waste it. When you make your business pitch to a potential investor, he will be asking you several questions and will need appropriate answers. This is where many people fail. They are usually not ready with answers because they have no detailed plan. Most, if not all the questions your potential investors would ask would have been covered in your business plan. A business that facilitates the potential investors’ decision-making process by answering issues of concern to them is regarded as being bankable. So, be prepared. A good plan is like entering an examination hall holding the marking scheme or answer sheet.
Every bankable business plan has a few components that attract potential investors. Prominent among such components is the sales demand side. Let us assume that you want to sell car tyres, certain assumptions will need to be made. How many tyres for instance do you think you can sell in your identified market between the time you open shop and the next one year you operate. Make the same projections for the next four years. Include your projections for the fifth in terms of how you intend to scale the business. Do you intend to add any related products? What is the number of cars that need your tyres? What is the number of people selling similar products? Where are they located in town vis-a vis where your business is located? Are there quality issues with other tyre brands sold in the market? Why should anyone abandon them and patronize you? What recommends yours? Identify what you need to know or do to connect your market with your products. If possible, detail how.
In short, your plan should unveil your product and its market potential. It should also go ahead to identify the problems you are likely to face and how to solve them. Before you go too far, think about the risks associated with the business and how you want to navigate the route by eliminating or at least, minimizing the risks in your business. The more you know about the operating environment, the better.
A good plan will always reflect how much it will cost you to make your tyres available. Don’t be fixated on the competitor’s figure. Strategize on enhancing your acceptance in the market and securing a significant percentage of market equity.
A good business plan gives a clear figure of how much capital you need to raise for your business to start and grow in the first few years of operations.
It must therefore break the need profile down by taking time to enumerate how you intend to use the funds you plan to raise from investors. This is where the rubber meets the road. Recently, I watched an episode of “Dragon’s Den”, the British equivalent of “The Shark Tank”. On that program, two young Nigerian entrepreneurs who started a street corner food business wanted the Dragons to invest seventy-five thousand pounds for a percentage of their business. The pitch proceeded very well until they both were asked how they intended to apply the funds sought. Suddenly, they began to literally contradict themselves. Obviously, they would have saved themselves all that mistake and embarrassment if they had drawn up a business plan and gone through it together. Your projected use of funds should cover items like salaries, the actual production of your intended product, rent, vehicles, technology, marketing, distribution network, distribution and other things that can guarantee success.
To be bankable, a business plan should allow you, your team members as well as your investors to determine if you are doing things right.
If you are fortunate to have accurate market and price assumptions, then your business plan will help you affirm your business opportunity.
Planning is the tool by which most successful entrepreneurs navigate the intricacies of a market environment or demand. Why? Planning allows them to step back and think through the important issues associated with an abstract or unproven idea.
Armed with this arsenal of useful information the entrepreneur can think things through and be better placed to speak with conviction to and persuade all stakeholders.
A well-written business plan is proof that the entrepreneur has a great idea, has identified an innovation, and has the drive and determination to introduce to or sell it in a market. It puts the business under scrutiny and creates a situation where what was opaque is now transparent. The information supplied in the plan therefore becomes the parameters for assessing progress or possibilities in the enterprise. With that, it becomes easy to convince and reassure potential investors that their money is in safe hands. A bankable plan is the greatest and most eloquent testimony to the quality of homework that went into it.
Issues of risk management, as well as necessary decisions to mitigate them and ensure the success of the venture are things that make any investor happy to be part of your success story because in reality, it is also their success.
Every entrepreneur must be aware of the fact that sometimes, things may not go as planned. Your plan should envisage this and reflect that possibility by its explanation of how it will provide buffers or prepare for contingencies.
Armed with a good plan, you are simply demonstrating your recognition of a great opportunity in a given market and that you are willing to collaborate with others to tap into the possibilities in that market with a view to growing market share in a significant way… continued
Remember, the sky is not your limit, God is!