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What is a business plan?  
  • You should either be in business, or be sure you want to be a business owner and that this is the right time for you to venture into business.
  • You should have a business, or have a clear business idea and area of business
  • You should have done a quick viability study of your business idea.
  • This sheet dispels the common myth that a business plan is solely a document created to secure finance.
  • It stresses the fact that the business plan is a thinking and decision making process.
  • It lists the advantages of having a business plan before setting up your business.
  • It gives a brief outline of the areas covered by a business plan and the structure of a written plan. This sheet is just as applicable to existing business owners who have never worked with a business plan before, as it is to beginner entrepreneurs. Where this sheet refers to doing initial research, the existing business owner can use his or her past sales figures and experience as the foundation on which to build a plan. The expansion of an existing business requires the same planning as a new business.
The myth about business plans
  • Many would-be business owners make the mistake of thinking that a business plan is a document
  • A business plan is not only a document, but should be a process of thinking and deciding what you want to do, how you are going to achieve it and what it's going to cost you.
  • Nobody can go into business without thinking about these things, or stay in business without continuously rethinking them.
  • Business planning happens in the head of the business owner. Writing down your plan is first and foremost a tool to help you structure your thoughts.
  • You can also type out your plan formally when you want to communicate your ideas to financiers, potential partners and staff. But the thinking comes first.
  • You cannot pay a consultant to write your business plan for you. Consultants can give advice, but you have to make the decisions and implement them. Beware of consultants that argue otherwise.
So what is a business plan really?
  • As a process, it takes the form of the business owner doing lots of reading, phoning around, speaking to other business owners, suppliers, sales reps, potential customers, existing customers, business partners, staff members and business experts. The business owner thinks hard about every aspect that his investigation uncovers, makes lots of financial calculations and formulates a plan from it. This can take anything from a week to two months - perhaps longer if you are doing it on a part-time basis, but don't spend too much time planning.
  • As a written document, a business plan can range from two to twenty pages, depending on who it is aimed at. If the business owner wants to use it for himself, it can simply be a few pages of priorities and working budgets, with the cash flow forecast right on top. If it is for presentation purposes, it can be a neatly presented document of not more than about 20 pages set up in the order described below
The advantages of having a business plan:
You can't try out your business in a hit-and-miss manner, unless you have endless amounts of money to waste. Planning allows you to:
Much of your business planning involves choosing amongst various options. Do not try to do everything at once, or be everything at once. Build on your core skills and resources and decide which tasks are the most important. This will send a clear message to the market place and build a solid, easily controllable basis for your new business and enhance your chances of success. It is not advisable to start out with two ventures at the same time .
Do a thorough viability study
The business plan forces you to seriously consider whether there is a market for your idea and to find objective proof of it. You have to consider all the practical aspects of the business, not just dream about the good bits. It forces you to calculate the costs of setting up and running your business and whether you can make a profit in the long run and have enough cash to survive in the short term. A business plan is not just about establishing the validity or not of an existing business idea. It is also refining that idea based on your thinking and research.
Create a guide for implementing
The business plan is a plan of action that remains important once you start. There is an overwhelming amount to do when setting up and running your business (or expanding your business) and a plan allows you to prioritise the most important tasks. When things do not go according to plan, you can take action. You also need to adapt your plan and keep communicating changes to important stakeholders and staff.
Communicate your plan to others
Without a clear plan in your head, you will struggle to get potential partners, staff or financiers enthusiastic about your business idea. Having a clear focus and direction gives other people confidence that you know what you are doing - this goes for banks as well as customers.
The areas covered in a business plan
Your overall business strategy
This is a broad look at your core business, what your business is not, your target market, and concrete targets in rand terms of the turnover and profit that you want to make. It helps to narrow the focus of the rest of your business planning and make it manageable. Your business strategy needs to be revised based on the findings of the other parts of the business plan. Once revised, it provides a useful introduction for the written business plan
Marketing plan
The marketing plan describes your clients, competitors, location, products, prices, promotion, and method of distribution. Based on this, you must estimate how much you are likely to sell - in the short and long term. This sales forecast is crucial for the rest of your business plan, because you need to plan your operations, staffing and finances around it. Business owners are optimistic people, and there is a very real danger of exaggerating your sales forecast. The rule, when it comes to devising a marketing plan, is to be very conservative in your estimates.
Operations plan
Here you plan how your business will operate and think through the detail and costs of manufacturing, delivering, stock control, merchandising and storing. If you sell services rather than products, you also need to put some thought into operations, for example your workflow.
Staffing plan
Ideally, you should plan your staffing around your business not your business around your staff.

In reality you might have to rely on the loyalty and enthusiasm of close friends or family to staff your business initially. You are probably also going to have to jump in and do lots of the work yourself. But it is good to plan your true staffing needs and the costs of these needs at least in theory, so that you know what to aim for. Your staffing plan should be a "roadmap " of how your business gets from the real situation to the ideal.
Financial plan
Your financial plan puts all your findings into figures and helps you to calculate whether you have the potential to be profitable and whether you will have enough cash to survive times of low sales.

It consists of
  • The income statement
  • The cash flow statement
  • The balance sheet.
If you know how to read these documents, you will know how to compile them. If you don't know how to read these documents, you will remain a small and struggling business. Learn how to read and compile them, and make lots of money.
The structure of a written plan
Starting with a summary description of your general strategy, your written document can follow the same structure as the process described above.
In other words:
  • A general overview of your business (your overall business strategy)
  • Marketing plan
  • Operations plan
  • Staffing plan
  • Financial plan
Depending who is going to read it, you can change the level of detail and the order.