Business Tool For A Successful Start-up (Part 1)

INTRODUCTION:

Most aspiring entrepreneurs are always scared of venturing  into new businesses. This is due mostly to the fear of the unknown. The questions at the back of most aspiring entrepreneurs include: Will the business succeed? Will I be able to recoup my investment? Do I have enough capital for this business? How will l penetrate the market? Who are my target customers? How will I raise funds for the business? Etc.

But the truth is that all these questions and many others can only be answered by carrying out a detailed business plan. Lack of planning is why most businesses fail at early stage after start-up. Most of the issues that usually lead to business failure were not either anticipated or not properly prepared for due to lack of business plan. Even a business with business plan can still fail where the plan is poorly prepared.

The adage “he who fails to plan, plans to fail” is more relevant to a start-up business. As such, every entrepreneur must understand the importance of a business plan and see it as an inevitable tool for a successful start-up.

A good business plan must contain the following sections:

Executive summary

The executive summary as the name implied is a brief and concise form of the business plan. It must cover all the key points in the entire business plan. This part is prepared last and must address issues like the need or problem being addressed, target market, competition, ownership, financial highlights and funding requirement. This is the part that is very important to key stakeholders in the business. Funding partners or other investors will look at the executive summary first before looking at entire business plan.

Company description

This section covers the overview of the company, ownership, history, vision, mission, core values, company profile etc. From this section the share capital, the key shareholders, the shareholding structure of the company must be mentioned.

Product and service description

This covers the market problem or need being addressed, product and service details, unique selling proposition, critical success factor, quality control and after sale service. Key regulatory issues that will be addressed-such as NAFDAC etc.

Target market

This section will address the issue of market size, market growth and trends (is the market saturated, growing or declining?), key customers, market structure and value chain, future markets etc. The various segments of the market must be analysed here.

Competition

This section will address all available alternatives in the industry. The barriers to entry using swot or pestel analysis, competitive advantage etc. The major competitors in the target market of the company must be mentioned together with their key strengths and weaknesses.

Management and organization

This section will address issues such as organisational structure, key management team and their profile, total personnel requirement and their job description, salary and wages, human resource policy etc. The minimum qualifications and experiences expected from the key staff must be mentioned here and the expected date of resumption.

Marketing and sales

This section will have a detailed marketing and sales plans. The marketing plan will discuss the results of the market research. The promotional strategy such as advertising, personal selling, sales promotion, public relations must be described. The detailed pricing strategy must also be described in this section.

Operations

This section will describe in detailed the facilities and technology required for production or service. The detailed operational procedures and resources required must be described. Various risks associated with the production or service and the mitigations must also be addressed.

Milestones

This is an aspect of the business plan most business owners take for granted. This section is key to measure the success and progress of the plan. Here you highlight the key metrics and various stages of implementation of the plan. It is good to have a month by month basis of what is to be done, the resources required and the personnel responsible for the delivery. This section will ensure the business plan is implemented according to the set objectives and goals.

Financial plan

The most important elements of this section are the financial forecasts such as Statement of Financial Position, Income Statement and Cashflow. It will also include the pre-operational expenses, capital expenses, operational expenses, cost and revenue forecast. The section must also have sensitivity analysis by looking at various scenarios of the revenue and cost profile. The various financing options available and the exit strategy must be discussed in this section.

Conclusion

Every aspiring entrepreneur must ensure that the business plan is giving priority before going into it.  It is better to spend just a fraction of the entire capital in coming up with a viable business plan than having to lose your entire capital due to inadequate or poorly prepared plan. For an existing business owner that is struggling due to lack of business plan, it is never too late. You can still engage a professional to help you with one. That may be the tonic you need to turn around that business.

The more reason, most of the training programmes of the government for aspiring and existing business owners always include a course on business plan writing. Let us all take advantage of this training including the BIG/GEM project of the Federal Ministry of Finance that is currently running.

Tomi Omojuwa