Do I really need a business plan for my business?
A: There is a great temptation when buying anything that requires assembly or reading an instruction manual to just rip open the packaging and get cracking.
It's the same with starting a business and many people will follow a logical plan in their heads.
While this may work for some, the consequences of a few extra screws left over do not compare to spending months of hard graft working on a business that hits problems and halts progress.
When you are preparing to start a business venture, the first thing you'll want to know is whether it is viable, sustainable and, of course, profitable.
A business plan that explores your market opportunity, your competitors and where you have an advantage will give you the confidence to get stuck in. Think of it as a safety net that you set from the beginning to test the feasibility of your idea.
By taking into account the operational and financial aspects of your business, you will be able to assess where you need to spend money, time and resources and ensure that all your efforts will bear fruit. It will give you the initial targets you can measure yourself on and a budget that you must stick to.
Inevitably most startup entrepreneurs will need funding. Every bank manager will ask for a business plan and expect you to answer the tough questions on where, why and how you will spend any money they may loan you.
Many people will say that a business plan will always change so why write it at all? I say that until you have documented where and what you plan to do, then you aren't able to test your assumptions and set realistic goals. Any viable business will have a dynamic business plan that changes many times as you realise that some assumptions just don't ring true. New goals can be set and challenges presented.
Alan Hucks is a business strategist at Creative HQ, Wellington's entrepreneurship and startup incubator.
A: No, but, and a big but, you do need a clear and succinct written description of your goals and the value you offer your customers (value proposition). With these defined and communicated to your team, you will get the focus required to guide the growth of your business. Deciding what not to do is more important than deciding what to do, for most businesses. Too often businesses attempt to do too many things, excelling at nothing.
Don't fall into the trap of spending too much time creating a detailed plan that will never get executed, is out of date by the time it is completed, or worst, sits on the bookshelf gathering dust. Create a business plan that is appropriate to your needs.
Mark Robotham is an SME business adviser. Website: growthmanagement.co.nz
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