Why do many entrepreneurs who have
brilliant business ideas never find the capital to transform their ideas into
real life businesses? Why do most startup businesses fail to attract the loans
and investments they need to grow and succeed?
Why do more than 80 percent of
businesses fail within their first five years? Basically, because many of them
did not have a plan. Like most people who travel to an unknown destination
without a map, guide or directions, businesses without proper planning get lost
and never reach their destination (success). As an important venture that
requires an investment of time, effort and money, entrepreneurs must take
business planning very seriously.
Business plan signifies strong
commitment
Studies have shown that
entrepreneurs who have the discipline to prepare a business plan are two and a
half times more likely to get into business. Writing a business plan helps to
focus and fight procrastination. Investing time and effort in researching
target market, analysing competitors and estimating profit figures is bound to
increase interest in bringing business idea to life. A business plan has the
power to positively affect your mindset.
When an idea is left undeveloped, it
starts to lose significance. As you gather information about your business, you
start to develop a strong level of confidence and ecan-dof spirit around your
business idea. Whether you plan to start a business from scratch or want to
expand an already established business, a plan will keep you interested,
focused, committed and determined to take action.
Business plan helps in developing
idea
The problem with thoughts is if you
don’t write them down, you may forget them entirely. So you decide to write
down your brilliant business idea. However, to become a real business, certain
actions and investments of time, effort and money must happen to transform your
beautiful idea into a successful business. How will you start? How much will
you need and who will you get it from?
What kind of customers will you
target? Who is your competition and what will you do to protect your business
from them? Are there any licenses, permits or government approvals you need
before you start? Who will be responsible for what? All of these are important
questions that must be answered in order to transform your idea into a real
business.
A business plan allows you to see
your business from the top and understand how all the elements will fit into
one another. Business plans often bring up interesting and creative
alternatives that could make your original idea much better and powerful.
Better preparedness and more
likelihood for success
Toyota is one of the most successful
car brands in the world. Year after year, it continues to release the most
beautiful and reliable ‘driving machines’ my eyes have ever seen. Like most car
manufacturers, Toyota invests a lot of time, effort and money in the early
stages of developing every new car model.
A couple of years before the new
model is released, Toyota’s engineers and specialists brainstorm tirelessly on
different aspects of the new car model, especially in the areas of comfort,
safety, speed, control and beauty. Toyota is serious about planning because it
knows planning is always required for success. Toyota is always prepared,
that’s why it always succeeds. Investing in planning usually leads to better
preparedness, fewer surprises and a higher likelihood for success.
Keeps the business accountable
You are very likely to be the
biggest risk to your business. Because you’re answerable to no one in your
business, there’s usually that temptation to take the business for granted. A
business plan allows you to set goals and track your progress and levels of
achievement over time. Without this accountability, the business will always be
subject to guesses and impulsive actions and will definitely perform below its
best potentials.
People who set specific, measurable
and time-bound (SMT) targets for themselves usually perform much better than
others. A business plan is the only way for entrepreneurs and businesses to
hold themselves accountable using SMT targets. It’s the best way to eliminate
procrastination, reduce the fear of failure and inspire you to take quick and
bold actions that will make the dream business come true.
Busines plan boosts chances of
raising capital
How can you bring out that brilliant
business idea and present it to potential business partners, bank loan
officers, investors and other people who can provide the capital you need to
start or expand your business? A plan is the most effective way to communicate
your business idea to other people in a clear, complete and convincing manner.
Partners, investors and bankers are
more likely to take you seriously if you have a well-written and professional
business plan. Banks and investors actually take business plans very seriously.
Because the information it provides helps them to properly measure the risk of
investing in your business. Banks and investors take calculated risks; they’re
not gamblers. Anybody who’s interested in your business idea wants to see that
you have taken the time to do a proper and detailed planning.
By Yinka Kolawole, with agency
report
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