A business plan is a written document, however with fast development of technology in recent years also stored electronically, which provides owners of the business and other relevant stakeholders, such us owners, managers, banks and investors, with important information about a new start-up company.
It describes in details the business aim and business objectives, market analysis, human capital and financial forecasts of a new business venture. Business plans are also used by existing businesses to help with business growth as additional sources of finance or skilled employees will most likely be necessary to aid future company development.
Before I decide to make a business plan for SuperBusinessManager.com or not, I wanted to write a short evaluation of whether or not having the business plan is absolutely necessary for a business, in order to take a more critical approach.
Advantages of a business plan
The first advantage of preparing a business plan is that, it can help to guide the business ensuring that our organization is moving toward the right direction. Therefore, it will help will planning, making decisions and finally measuring results. Owners will be aware of the actions they need to take in short-term, medium-term and long-term in order to survive, grow, and continuously add value to its customers.
The owners of the business will set business aims outlining the purpose of their company’s existence. For example, the aim for my website is to help people around the world with learning business management better for better life decision making, and to help all level managers with making better business decisions.
In the business plan, the owners will also decide about business objectives which are various ways to achieve the main aim. For example, in order to help my readers to learn better about how business management can benefit their private lives, I am providing them with solutions to many difficult life problems which can be dealt with in the easier way when we use proven business practices. And, in order to help managers to make better decisions, I am giving ideas for making improvements (e.g. in order to increase employee motivation, managers should consider both financial and non-financial motivators) and analyzing possible consequences of taking certain actions.
Second, the business plan can support loan applications making sure that, as business owner we are able to raise enough financial resources to successfully start, run and grow the business. Therefore, the fact that we have got written down detailed financial information about our company’s current financial standing and its needs for finance (in the form of financial statements such as Profit & Loss Account, Balance Sheet and Cash Flow Statement), it may help to persuade lenders to lend us a certain amount of money for a specific period of time.
The plan will also help to attract new investors to provide finance for our new business venture. Financial forecasts for the future included in the business plan (in the form of Sales Forecasting and Investment Appraisal) will give investors detailed information about what rate of return they can expect from their investment.
I am and will not be actually looking for any investors at all, neither planning to sell a part of SuperBusinessManager.com to anyone in the next 10 years. This whole project is financed entirely from my own savings.
Third, the business plan will aid production and operations, so that the production process of goods is both efficient and cost-effective.
By deciding in advance about main suppliers of raw materials, estimated amounts of fixed and variable costs, as well as a number and type of workers to be hired, we will be able to better organize resources. These resources will be later used in the manufacturing process of goods or when providing services directly to customers.
With the business plan, our company will manage to provide the right goods and services, in the right quantities according to demand, at the right quality level expected from customers, in a cost-effective and timely manner without unnecessary delays. We will also be better prepared to handle unexpected issues such as breakdowns or delay times.
I am the only person who is currently working at SuperBusinessManager.com, and I am not planning to hire any full-time or part-time workers in the future at all.
Disadvantages of a business plan
On the other hand, the first disadvantage of a business plan is that, it gets out of date very quickly as the internal and external business environment changes unexpectedly.
While business owners may spend countless hours patiently writing every single detail of their company operations to make the business plan look professional, a natural disaster or a new law banning sales of our products may drastically influence our business, or even cause it to shut down. In fact, this kind of major event can completely waste all that time that we have spent preparing this document.
Thereby, instead of actually using our time (a very scarce resource these days that managers have limited at their disposal), we should shift our focus toward making real products to serve real customers. Otherwise, we would be just producing a simple piece of paper that may lose its validity within just a couple of weeks or even days.
SuperBusinessManager.com is quite an innovative idea globally, therefore I would like to first see how my website develops before I decide on a future course of action.
Second, the business plan does not guarantee that the business idea will be successful whatsoever. Even the most innovative ideas, which may look brilliantly in theory and can be easily proven as of successfully bringing millions in sales revenue, may not attract any customers at all, or just few people will need or want our product.
Without having entrepreneurial skills to take a new idea and turn it into practice by creating a desirable good or service, our innovative thought will remain meaningless.
Or, even though we manage to create that innovative product, without being self-motivated to carry on with selling our stuff continuously, nor self-confident that we are going to be successful at the end of the day (create a sustainable profitable business), we will end up giving up, and finally stopping all business activities.
I agree with this point that is why in the first year of operations I am only focusing on survival, since SuperBusinessManager.com is new and unestablished brand yet.
Third, the business plan will be of no use once we have already had some business knowledge. As with our past experiences of running a company, we have already gained many necessary skills to organize factors of production – enterprise. We have connections with reliable suppliers who can deliver raw materials or components just in time. We know who our customers are. We know the best ways to advertise to them in order to let them know about our products and services. And finally, we are able to skillfully calculate projected sales revenue and profit.
Therefore, jotting all these ideas to construct the business plan will not make any sense! We should rather concentrate on maximizing sales revenue instead, quickly breaking even to make first profits and better serve the needs and wants of our customers. Because even the most beautiful business plans will not generate sales revenue by itself, neither find potential customers for our companies. We need human effort more.
And, as we may have already had our first customers, who will most likely be our family members and friends, we shall focus our time, energy and money toward doing business, rather than just writing about the business using way too optimistic sales forecasts which will simply end up being unrealistic.
I have quite a clear vision of what I want to achieve with this website and how to put my business together.
Is it necessary then for a new business or an existing business to have a business plan?
In conclusions, having the business plan is not absolutely crucial to start a company, neither required to be successful.
While the business plan may help new business owners with planning details of their business – decide which products to sell, choose the suitable location, weight up resources required, calculate finance – it will not guarantee any market success. It is because the process of actually doing business is much more important than just writing how beautiful this business is or might be in the future.
Even though we make an incredibly fantastic sales forecast indicating that Amazon.com will sell 10,000 products in the first year, we absolutely cannot ensure that customers will buy these 10,000 products. They may think that maybe the price is simply too high.
That is why it is more important to, first, test our ideas for products, and second, to evaluate how other people respond to them, before we devote more resources into planning and organizing factors of production. What we personally need and want (our own brilliant innovative ideas for new products and services) may not necessarily be alike with other people’s expectations.
What seems to be absolutely crucial is that we, as entrepreneurs, when starting a new business, are putting all our efforts trying to create and launch new things rather than just blubbing about them on paper as actions speak louder than words.
Therefore, at this point, I have decided not to make a written business plan for my new business venture, but instead, focus all my time and energy on writing stories and promoting on social media in order to attract first readers to establish my consumer base. However, I will keep in mind all basic elements of a business plan.
