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Business Plans and New Companies

A matter of fact:

9 out of 10 business ventures fail in their 1st 3 years. The irony is very often they started out as excellent ideas, with a great deal of excitement and promise. They fail for two main reasons -

Poor planning and lack of working capital

Ironically those statistic are reversed in places like Japan where planning is seen as paramount making execution a lot easier. It is the instant gratification that western business seeks that causes entrepreneurs to under plan having to spend much energy and opportunity trying to hold it all together.

Elements of a good plan

There are quite a few elements to a well thought out plan and many templates available as guides. Here are a few:

  1. The purpose of the enterprise which places it in its industry and marketplace
  2. Product or service definition placing it in the same market place.
  3. Marketing Plan which covers market size, definition, competition and competitive advantages – in all the 4 P’s:
  4. Sales strategy whether Franchise based, internal or external sales force – how this product or service will be sold.
  5. Financials – 3 years of financial forecasts clearly annotated with assumptions.
  6. Working Capital Needs by creating cash flow forecasts and testing for variability.
  7. Finance options for start up and cash shortfalls.

The items you gloss over will be the ones that bite you back and bring the enterprise undone.

Some great companies have started out as an ideal and a detailed plan in an exercise book. The best I ever saw was a plan by a fellow University Graduate that covered 20 years of expected development. All came true and they are today Investec are one of the largest Merchant Bankers in the world.

The plan should also include the success criteria – the moments in time that will determine how well we are performing both Financially and Managerially. We can set Key Performance Indicators (KPI’s) within the plan that allows us not to be too rigid in following a plan but allows us to adjust and see the financial stresses ahead if changes are necessary.

Use the sounding board of good operators, accountants, colleagues and others to test the plan before making serious financial commitments. Your Portal can direct that activity with new business to set them on the right path to success.

Find out how you can get more freedom to focus and grow your business with Your Portal - Back office solutions.