The truth about setting a Business plan

Monday,May 26 ,2008

During the first year of business school our coach told us that a business plan gives the strategic direction for business activities. Writing the plan describes where you want to go and how to get there, and then you follow the plan you have written to achieve your goals. It really sounds pretty good! But the real thing is much more different from school. If business were successes as simple as following a few steps we all have be running our millionaire businesses, but we are not. If you want to run a successful business you have to be an “artist” and use your imagination and improvise. No business plan in the world can give you these resources; you have to provide them yourself.

How good is a business plan if it does not guarantee success?

There are two main reasons to create a business plan.
To formally formulating the strategic direction for your business
To communicate that strategic direction to people or firms that will provide funding for your business.

Let’s examine each of these points separately.

Setting up a direction for your business

A business plan does not setup your business direction, it gives you an idea by writing on paper of what are you looking or expecting for your business, your strategy comes first and your business plan come second. Putting things other way around does not work. If you do not have a strategic direction before, the act of writing a business plan will not work properly, in other words you must put in order all your ideas before writing anything. In fact, sometimes the act of writing a business plan will uncover the fact that a business has no guiding strategy.

Supposing that your business actually does have a strategic direction, creating a business plan helps to make that strategy official. A strategy that exists only in the mind of the CEO is not an official strategy, it is just a thought. Only the act of putting that thought in paper make it official. Writing that strategy on paper will help to share with others.

Communicating with investors

What else you can do with you strategy? The most important, you will want to share this strategy with one group of people: People that have money, you potential investors. The reason for sharing your strategy with these people is simple: You want them to invest in your company, and the more they know about your business strategy the more likely are to invest on you business. They want to know that they will get a good return on their investment.

Summary

The academic approach for business planning are only the basis, still you should put your imagination to work in order to have some good results.
There are two reasons for having a business plan: Build a strategy and to communicate it to your potential investors.

Next ->> Starting your planning engine - Part One

Category Business Plan

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