Power of a Business Plan

Image by plantoo47 via Flickr

What constitutes a business plan, needs to be defined before one can decide to formulate a good one. To do that, one has to know what a business plan (BP) does, or what is the intent behind it. Perhaps right from the days of the Taylorean era in management, many ambiguous terms got defined, and one of the most well-defined was planning, in general, and business plans (BP) in particular. The importance of BPs became very relevant, as the days grew and today BPs serve a lot of many purposes that include showcasing the companies intrinsic capabilities, strategies and aspirations to the outside world in clear terminology, and more importantly funding operations at the time of starting a business.

Additionally BPs serve four key roles or stages in the life and term of a business enterprise, at the following:

(1) the establishment stage of the company
(2) launch of a new product or activity
(3) opening of a new area or segment of the market (local / global)
(4) some strategic development impacting on the business structure or framework.

Uses and users: In each of these events or stages, a mixture of dynamic and static data forms part of the happenings, which needs to be documented, in the form of the BP, so that proper inputs / outputs and or both can become operational,- examples are finance, manpower, sales (numbers and market), and interaction with internal and external agencies, like financial institutions, management hierarchy and the workforce. All participants need to understand each other and their individual part , in the functioning of the business, thus making the BP play an all-important role in planning the business and running it successfully from all possible angles.

Who is the best: With a realization of the need to formulate a good business plan, let us see what one needs to do to document a good one. The entrepreneur is the best person on the scene, as he/she owns or holds the baby ñ the business. Who would know his/her baby better than the mom or the dad ñ the ones who conceived and nourished it, and continue to do so. Taking the assistance of a professional is no doubt necessary to give it (BP) a shine but the facts and core needs to flow from the entrepreneur and none else. That will ensure that whomever interacts/involves with the business gets the right messages in all its sincerity.

The how and what: A well-documented BP usually done with the help of a professional, can be distinguished for its quality by key features that include Clarity, Realism, presentation of facts based on data, credibility infusing statistics and of course coherence in the policies both stated and assumed. In real terms the parameters that need to form the basis for making a good business plan can be listed as (a) definition of concrete policies, (b)data from commercial feasibility studies and (c) the market ñ in terms of estimates of customers, and market share and (d) down-to-earth realistic estimate of increase rates for months/years, and (e) cost calculations for implementing the various planned actions.

Additionally a good BP also has to present a mirror-image of the business in a concise form with contents that spread over the past, the present and future but based on the fundamentals such as marketing estimates, financial projections and pricing both within and the competition.

In summation a good BP always has to be a dynamic document, which projects the business based on its performance, through a systematic appraisal and reporting mechanism, that measures against stated objectives, paving the way for suitable modification/alternatives in order to achieve success in planning at all stages and eventualities of the business.