Apart from just estimating and preparing pro forma invoices or quotations, I have been able to prepare quite a few bills of quantity for housing estates. Those bills of quantity were not just for one company to fill. Other aspects of the entire building(s) such as windows, doors, sanitary wares, bricks and civil works, electrical, plumbing, tiling etc, were included for other companies that specialize in them, to fill. When the bill is completely filled by each company involved the total cost of the building emerged. This is then multiplied by the total unit to be built. That is when you can say the estate cost so and so much to build.
Thus all costs are converted into monetary cost and then harmonized into a single sum of money. This is what business planning helps to achieve. Business planning is like drawing a building plan then estimating the costs of each aspect (materials and labours to be used) and finally aggregating the various costs. This enable you determine how much it will cost you to get your building up and completed.
You must have answers, as provided below, to the questions (the 4Ws +H) what, who, when, why and how to be able to fully appreciate the power of a business plan.
1. WHAT IS A BUSINESS PLAN FOR?
A business plan is strategic business document which:
· Serves as an organization/business road map or compass giving direction and phase development.
· Helps communicate exciting prospects and growth potentials of your business idea(s) to a third party.
· Gives an organized structure to your business/idea(s).
· Shows the broad and overview perspective of your business and how it should be run.
· Provides specific information about the business to potential investors and financial institutions.
In a nutshell, a business plan clearly describes the goal and objective of an existing or proposed business, showing its current status and vision of the future. It projects future opportunities and outlines how and from where the funds (needed) will come and maps the marketing, organizational, operational and financial, strategies (sub-plans) that will help achieve the overall goal. It must be noted that your business plan is your intellectual property and therefore must be guarded as one, legally and otherwise.
Note that: you can and should get a copyright for your business plan but where that cannot yet be done you can e-mail it to yourself to show a date of publication so that in a situation of legal actions the date it was e-mailed will serve as an exhibit that the business idea was first conceived and published by you.
2. WHO IS A BUSINESS PLAN FOR? (WHO NEEDS THE BUSINESS PLAN)?
· The entrepreneur/business owner himself: that is, you. It provides you focus, order, discipline and structure which help you run your business professionally. A well written business plan provides workable systems. With a workable system the business will have a soul and life of its own separate from yours. Without it your weakness becomes the weakness of the business. The system, though operated by you and your staffs, in reality controls both you and the staff.
· Partners: should you wish or decide to have partners now or in the future, they will be able to see clearly what your vision is for the business so they can run with it and with you.
· The banks and other financial institutions: these may be interested in providing facilities but surely will need to know where the venture is headed.
· Venture capitalists: these are business men and women who are looking for business they can help invest in with a view to recouping profits.
· Angel investors: these are wealthy individuals who may want to help invest in your business with or without a desire for personal gains and must be convinced that you are headed in the right direction.
3. WHEN DO YOU PREPARE A BUSINESS PLAN?
· During, at or before start-up stage: having your business plan ready and handy as a start-up is a smart thing to do.
· At transition point of your career: that is, at the time you are thinking of either changing your career from paid employment to self-employment or combining entrepreneurship with your job.
· New product development stage: a thriving business enterprise may wish to introduce a new product line into the existing one(s). A business plan should be done for this planned move.
· When entering into a new market: this could include when opening a new branch in a different market environment.
· During time of expansion: the above two situations could apply here.
· At the time of strategic re-branding, re-engineering, realignment or redirection of business and its operations: this is like starting over (more or less), therefore it need business plan.
4. WHY BUSINESS PLAN? (FUNCTIONS AND MERITS).
· It shows the exciting prospects and potentials for grow the of your business
· It projects future opportunities for your business.
· It helps attracts capitals, investors and other resources.
· It shows potential investor (venture capitalists, angel investors and financial institutions) that you know where you are going and therefore can compel them to go with you.
· It helps you properly define your business and also focus on your objectives per time.
· It identifies customers. That is, it identifies markets.
· It maps out marketing and sales strategies.
· It maps out operational processes.
· It maps out management procedures.
· It helps identify costs. That is, it projects your financial requirements.
· It forecasts revenues and expenditures
· It shows future ROI and profitability of your idea(s).to
5. HOW DO YOU DO A BUSINESS PLAN?
Next week in my next post I will be discussing how you can prepare a good business plan following the right steps. See you then.
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