In this article, we shall try our best to address various queries which most of the Businessmen has in relation to Business Plan – in a simple Q&A format.
Let’s get started!!!
- We somewhat have an idea of what a Business Plan is – but can you explain properly in detail so that we get the complete essence of it?
Business Plan is the mother document which defines why a Business exist and what are its short term and long term goals.
A good business plan is a blue-print of the business and provides answers to the following key elements:
- How big is the targetted market?
- What shall be your share in that market over different time periods?
- The business strategy to achieve that targetted market share
- What all resources are needed (funds, manpower, infrastructure, etc.) and the associated cost for the same?
- Implementation Timelines
- Investment breakup – into capital expenditure & operational expenditure
- How and from where the funds needed for the business shall come from together with associated costs?
- What shall be future Income Statement, Cash Flow and Balance Sheet look like and why so?
- What are the most important variables that affect the aforesaid business statement significantly and to what extent?
- Varied type of ratio analysis
- Return on Investment, Payback period, etc.
- How do I know whether my business needs a Business Plan or not – particularly because there are too much uncertainties into it?
In fact, greater the uncertainty – greater is the need to be prepared so that the final outcome is in your favour. Every business (whether small or big) will always have varied types of uncertainties and that’s the nature of any business. Our effort should be to understand these uncertainties and try to reduce them to the extent possible.
Business Plan is like what a Compass is to a Sailor. The compass guides the sailor by giving him a sense of direction; similarly, the Business Plan guides the businessman in which direction his business is moving so that he can realign his business strategy & action whenever needed.
- We have gotten our Business Plan done in the past – but I don’t pay any heed to it? It is just a paper work without any tangible actual benefit to the management.
The objective with which the Business Plan is prepared is very crucial. Any business plan which is not prepared for Management decision making will always be considered lightly.
However, a Business Plan which is prepared for the Management will not only guide him about the progress of the business, but he can also do varied type of scenario & sensitivity analysis and easily ascertain the probable outcome. This helps in taking informed decision rather than just being dependent on gut feel.
- Having understood the importance of Business Plan, how should one go about it in preparing the same?
Focussing on core competencies is a universally accepted phenomenon. An owner / promoter is normally biased with regard to his business affairs – hence, it is advised that this be prepared by an Independent Expert in consultation with the management. It has to be a great team work so that the end result is truly awesome.
- I understand preparing a Business Plan is the first step but implementing it is more crucial. Can you guide on how this can be done?
Absolutely correct.
Getting prepared a Business Plan is the first crucial step. However, equally important is to ensure that the same is religiously followed within the organisation; the targets are defined for sales & operations team accordingly. A monthly meeting be done internally to review the business plan, understand the variances, their reasons and take timely corrective action.
These important steps if taken timely & regularly will go a long way in enabling you to achieve the goals, mission & vision that you have set up for your business in very efficient and professional manner.
For more details, please feel free to reach at lalit.chetani@ontrustcap.com
Best of Luck!