In the last few weeks, we have seen the strategic steps to take when establishing a business. This week, we will see how every business operation needs a business plan to work to.
A business plan is a formal document that defines what your business objectives are and how you will implement them to achieve the desired outcomes. Planning is therefore crucial and, like a road map, a good business plan will help you improve your chances of success.
Research has shown that about 90% of new start-ups will fail while under 50% of businesses will make it to their fifth year. These are sobering figures.
Some of the reasons quoted for failure include:
Wrong business approach – do you want to start a business because you just want to make money and think life will be easier without a boss? Or are you passionate about your new venture, have determination and are not frightened by failure? You will definitively need the latter approach, as setting up a business is hard work as many know.
Lack or no market research – as we have seen researching your business field, finding your niche, knowing your competition and understanding your customers is paramount to success.
Poor management – new business owners may lack relevant business and management expertise. This can be mitigated through training or by outsourcing to competent professionals.
Lack of capital – insufficient funding for day-to-day operations is also a reason for failure and some business owners’ lack of funds force them to close their doors before they have time to make their marks.
Setting up in the wrong location – location is important for your success. If your customers struggle to reach you, you will lose them.
Poor marketing strategy – in our day and age, businesses need to have a good marketing strategy, starting with a website. This will allow them to be found by their potential customers.
Knowing this, one can see that a robust business plan is a matter of utmost importance. It forces you to examine all the various aspects of your operations and think carefully how these will be developed in the future.
Writing down a business plan focuses your expectations and has many advantages, such as:
Supporting loan applications.
Raising funds. See our blog on ‘Securing appropriate funding: Equity vs debt.’
Defining accurate financial forecasts.
Defining and implementing internal and external objectives and setting up road maps to achieve these.
Developing a marketing strategy.
In summary, a well-structured business plan will outline all your business strategies, its aims and objectives, the staff you need, your pricing strategy, your marketing and communications plans, as well as your financial position.
Entrepreneurs may opt to write their own business plans. However, having a professional, working in close collaboration with you will provide valuable insights, avoid pitfalls, save you time and ultimately money.
If you need help to develop your business plan or review your business strategy, please email us at: enquiries@ovacgroup.com