Do you need a business plan?

Many people propose that the way to true wealth is via entrepreneurship. A mentor once tried explaining this using an Igbo adage; he said that an employee has money that can be counted, you know exactly how much it is meant to be every month, but an entrepreneur has money that is countless, it has an open-ended sum continually which is the definition of true wealth by this adage.

But not everyone is cut out with the traits to be an entrepreneur, true, but everyone can have endless money as stated in the adage above. You can do this as either an entrepreneur or an investor. As an employee-investor, you must save to grow your capital for investments then plan and execute your investment portfolio over time till it generates enough income to equate you with the entrepreneur. But the entrepreneur usually does not wait for the investor to catch up, usually, from even one business, the entrepreneur grows his/her revenues and returns to the point where they set aside enough money to also create investment portfolios as alternative incomes to their business returns and fallback support for rainy days.

Therefore, going into a business is about your purpose, which is not primarily to be rich. It is usually to solve a problem, fill an identified gap, meet a need or lead a cause. Once these causes are well defined and implemented, value will be created, and your customers will willingly exchange premium monetary value for your business value. Wealth and riches are therefore a function of value creation.

If you decide to take the entrepreneur route, then usually, the first thing that is usually required of you (especially if you are introducing investors, financiers, bankers or partners) is a business plan. Many people have argued for and against this stance. Many go ahead to write their business plans and end up with an analysis paralysis and never get to completing their business plans or starting their business. They believe that the business plan must be detailed and be extensive producing 100-page to 500-page documents.

I am here to let you know that one of the documents entrepreneurs hate to prepare is a business plan and, one of the documents that investors and their related parties dislike reading is also a business plan. So why ask for it you say? Well, he who fails to plan, plans to fail as they say. So, it’s a very important document. But it does not have to be a massive multi-page document, at least not at startup. I have consulted hundreds of startups, and I can give you an interesting list of startups that started with not much of a formal business plan and have turned out very successful today. But from my experience as a startup coach and small business expert, you must have a business plan.

The issue is that it does not have to be an unduly extensive document, it just needs to have the key details. It must be a fluid document that evolves on a regular basis as the business evolves. Ensure regular review of the plan to expand or reduce or eliminate some sections of the business plan. Let your business plan review sessions be as regular as monthly or quarterly. That is the essence of the business plan in the first place – to guide your business, what’s the essence of a guide if you don’t review regularly.

Type, size, complexity, of the business plan is now a function of the nature of business but remember, no matter how complex a business plan is or no matter the extensive number of pages of a business plan, the executive summary is usually one to three pages, and it covers the whole plan.

That means you can stop stressing or fretting over the size of your business plan as a startup or small business and stick to the key details on one to three pages and build in the rest as the business progresses.

A business plan is essential and a necessity for a business, but it should never be a reason for not going into a business or starting a business.

The size, timing and content of your business plan has given birth to concepts and principles like #desighthinking or #businessmodelcanvass, or even #boothstrapping. All these are elements of writing a business plan, but if you don’t have a business degree, this will be a herculean task for you and the price for creating a business plan for you today is not cheap.

Like I said, just stick to the basics and build from there, stay within the 3-page business plan and grow from there.

The main basics necessary in your business plan are below

1.???? Ideation

Basically, what led to your eureka moment that birthed that idea? A key question answered here is WHY ARE YOU IN BUSINESS? Keep this answer short and to the point

Next in this section is to define your vision (it does not have to be perfect at first) but keep it short, like withing 3 sentences. Then next you define your mission. Your vision is what you want to be know for while your mission is how you become that. Next state

-???????? Your business objectives like owning 15% market share, reaching 15,000 customer bases

-???????? Strategies and milestones are now adding timelines to those objectives and stating key steps to achieving them. Like owning 15% market share by December 2025. A major strategy might be like being the most affordable in your region and you plan to achieve this by signing supply deals directly with the manufacturers to eliminate the middlemen.

-???????? Business viability – is your solution commercially viable?

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2.???? Business overview

This basically continues with answers to core questions and definition of your business culture like below

a.???? What is your core value? What would you stand for as a business that money can’t buy?

b.??? Who is your customer?

c.???? Why is that person/group/segment your customer?

d.??? What are your customer personae/customer profile

e.???? What does competition look like for you and who are they presently?

f.?????? What stands you out in your market - your unique selling proposition

3.???? Business products/services

Based on your define customer, and your identified solutions to their pain points/pleasure points, what products/services would you be creating to service these customers

4.???? Business management

Who are those people that will work with you in achieving this vision? This is an opportunity to state what experience/knowledge/certifications/diplomas qualify you to engage this venture and same for your team. Note that the team does not have to be complete at the get go, just that the initial people must meet the key indices. It’s not mandatory you state how much you pay them at the onset, especially if that is not on the table yet. But you must apportion a cost element to them.

5.???? Marketing & sales

How do you plan to get these defined products/services to you identified customers when they need it and collect payment for your supplies.

How do you plan to create awareness for your business and your brand, how do you plan to maintain your relationship with your customers in the long haul and ensure return sales.

This should take at least 50% of your initial plan.

6.???? Business costs & projections.

What costs would you incur in starting and running the business? You don’t need to be an accountant (you can hire one) to prepare this, just keep it simple, like list items like license fees, cost of buying equipment, renting a place, salaries, products parts, marketing, etc.

Also, make projections here but keep it realistic and progressive. If possible, offer a 3-5-year projection of costs. Make revenue projections here too and possibly net off from costs to show projected true state of business over time. It is usually advisable to project over a period from loss making to profitability, so an investor has a clear view of their investment development. Never forget to start with a summary of your investment needs and how you plan to pay it back over time realistically.

7.???? Risks and mitigants.

A simple SWOT analysis will be done here, you can maybe add a PESTEL or other similar measures.

8.???? Others

You can now add other information not stated above.

Note that all these items can basically be listed or kept short and simple at startup and expanded over time with further research and discoveries and experiences. But all must be reviewed regularly.

Note that no one business plan is ideal for all stakeholders, you must learn to tweak your business plan to meet the key requirement of your stakeholder per time or as needed.

You can add other elements like an organogram (or organizational chart), references, research findings, etc.

It also pays to engage the services of management consultants (like Coinbox Limited) who will work with you to develop bespoke business plans of value to you and your stakeholders saving time and money and opening your business to see and access more opportunities that exists to you in your cause.

I wish you success in your entrepreneurial journey.

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Ayo Emakhiomhe.