Mapping out the profitable direction
By Antony Ngatia
Capital has often been sighted as the greatest impediment towards setting up a small business. Banks and other financial institutions often require some form of security or collateral in case you the borrower fails to pay up.
But that has been the only side many people know about banks and other financial institutions. But, when convinced, these institutions will readily advance credit, but only to those who really prove they need it.
When you walk to a bank or any financial institution seeking a business loan, having some other documents could enable you obtain a loan even where many others have tried and failed.
Armed with a business plan, for instance, as you walk up to the loans officer could enable you build a convincing case for your business’ ability to repay the loan. A good business plan should therefore specify how the business would pay borrowed money taking into account risks and expenses.
A business plan is a comprehensive document detailing the nature of your business as well as defining the vision you have for that business. Like a CV, a business plan should be so appealing that the loans officer will not have any question or doubts about your capacity to repay the loan.
But the business plan should not only be for attracting financiers or investors. On the contrary, there are several other reasons for writing a business plan.
A business plan will assist the management of a firm to set goals and also in long range planning or the strategic planning process. A business venture like any other project in life should have both long range plans and short range plans.
Plans should be specific, measurable, achievable, realistic and time-bound. Apart from that, a business plan could enable you to attract employees.
Quality employees like working in well organised firms. Well planned firms complete with roles and duties of each worker undoubtedly have fewer conflicts between the employer and the employees.
A good business plan will not only help you attract the best employees but will also put you in a better stead to attract the right talent. In the same breadth, a business plan could enable you attract suppliers.
When you wish to create an alliance or contract with other companies, the business plan again will be the vital tool to assist you accomplish that.
It communicates to the others the nature of your business, how you operate and your future goals.
In addition to that, you need a business plan to convince yourself that the new business is actually worthwhile before making any significant personal and financial commitment.
Although plans vary from one type of business to another, one should prepare a business plan that bears all the elements of a standard business plan: title page, table of contents, executive summary, company description, product or service to be offered, market competition, marketing strategy, operating plan, management summary, financing, attachments or documents.
The financial section of a start up business plan should typically have three projections for, a balance sheet, a cash flow analysis, and an income statement. In these detailed estimates of expenses and sales should be shown.
Writing a business plan should not be viewed as merely an exercise where the end justifies the means but on the contrary it should be an end in itself.
The writing process should teach you many things concerning your business that you would otherwise take long to learn.
It is true that it is still hard to obtain funding from a bank just by the strength of a good business plan alone, but that does not mean it has not happened.
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