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Another reason for a business plan

Written by: Michiel Jonker

Article Overview: It is logical, and a standard practice, for an entrepreneur to develop a business plan for his/her new business venture. As a matter of fact, it is impossible to obtain venture capital or a loan from the bank without a business plan...

Another reason for a business plan

It is logical, and a standard practice, for an entrepreneur to develop a business plan for his/her new business venture. As a matter of fact, it is impossible to obtain venture capital or a loan from the bank withoutone – over and above the clear benefits of performing pro-active business planning.

The objective is, among other things, to describe, identify and plan the business venture in detail – from the business opportunities, activities, legal structure, organizational structure, market, vision, mission, suppliers, marketing plan, financial planning and forecasts etc. etc. Focus is placed a lot on the product and the opportunities in the market – as well as the financial forecasts.

Unfortunately, too many business owners start their businesses without giving a second thought to the potential pitfalls (the inherent risks of the business venture) in the business plan! This is a part which is often neglected.

In other words, little or no attention is paid to the potential business risks – i.e. ANYTHING that has the power to eat your profits, i.e. any event, action, decision, lack of action or decision as well as any circumstance in- or outside of your business that causes or could cause PROFIT EROSION. Business risk is a generic term for the many causes/factors/threats that have been identified thus far as reasons for business failure - no matter whether these causes were of strategic, operational, financial or legal nature.

Regardless of whether you already operate a business or plan to start one, you will be in a better position to obtain venture capital for your business by developing a business plan in which you can show the bank or venture capitalist that you have identified your business risks and how you are planning to deal with it in order to grow.

This will prove to them that you are not only dreaming about business success, but that you are standing with both feet on solid ground by acknowledging the fact that you do face risks and that you have planned to deal with it.

In other words, that you have identified countermeasures to protect their investment capital and your profits against the negative financial impact of the business risks you are facing. For this reason we have decided to assist small and medium business owners in profiting from their business risks TOO (i.e. by preventing profit loss) - by helping them change their patterns of thought. They need to change the way they are thinking about and dealing with their business risks, threatening their businesses' existence, future and growth! It must be done at strategic, operational, financial and legal level.

Let me know what you are thinking about this! For more information on the subject of implementing risk management strategies in your enterprise, please click here: business plan.

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Article Tags: Business Plan, Business Planning



Related Forum Posts
Is A Business Plan A Waste Of Time? - According to various government statistics, up to 80% of businesses will fail within their first five years of operation. That number is staggering to me. At the same time, when I look at most business owners, most of them do not have a business plan for where they want to go. When you ask entrepreneurs why they don’t have a business plan, most of them will say something like: “it’s too much work”, “I’m not trying to raise money”, “it’s all in my head already”, or “my business changes too often for a business plan to be worthwhile.” Sound familiar? Did you write a business plan for your company when you first started? Are you planning on doing it for your new business idea?
Re: Is A Business Plan A Waste Of Time? - A business plan is never a waste of time. A friend of mine was funded by the quality of his business plan. The banker looked at his business plan and concluded that he knows what he is doing.
Re: How long should a Business Plan be? - Hi Sally, The length of your business plan can very, really, on the type of business you are planning to open up. It also varies based on just how extensive you want to be with your plan. The more ideas you have, the longer the business plan will be. But if you want to just create an outline on the main points that you would like to focus on, then it is apparently shorter. But if you can go for the former, that would be better. THe more details you include, the more efficient it would be for you when it comes to executing them later on. However, it all boils down to your own preference and how you would like your business to be.
Is "Good" - Good Enough - I was just reading the thread about whether people need a business plan and this idea hit me. Someone commented that if you don't have a business plan and you're doing all right - then why spend the time or money. But, is doing good or doing all right - good enough? Maybe you're a business that is getting by and making the bills. What if, taking the time to really evaluate your business with a detailed business plan could help you see places to make some changes which could take your business to the next level? Would it be worth your time? I think it would definitely be worth the time. That could be because I've worked with a number of business owners who were "getting by", but once they committed to having someone evaluate the business - they saw a drastic increase in their revenue. So, why couldn't or wouldn't an entrepreneur do an evaluation to determine where the business is, where it isn't working and where it should be going? This could be done in a business plan format. Just some random thoughts. Shri
Re: What makes a good business plan? - Another important component of a good business plan is that it follow the SBA recommended format. That is especially true if you plan to use your business plan to request funding.


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