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Business Plans South Africa

writing-a-business-planA useful guide on how to write a business plan.

It’s no surprise that most experts and financial institutions advise those thinking of starting their own business to put together a comprehensive business plan first.

But before you put pen to paper, there are a few vital exercises you need to go through to ensure your business idea is a viable one.

The business you plan to start might be in an industry you have some experience in or it might be totally new to you, either way you need to do in-depth research into the industry and market to make sure you fully understand how it operates.

Your research should include understanding the dynamics and forces affecting the industry, the preferences and characteristics of your target market, insight into how many competitors are already operating and the quality of their product or service, finding out who you could partner with to start the business, how your product or service will be created and delivered and how it is different from those that already exist, and identifying a profit and operating model for the business.

Some of the sources you can turn to for this information include:

  • The Internet
  • Industry experts and associations
  • Suppliers who play a key role in the industry
  • Existing competitors in the industry
  • Interaction with member of your team.

Step 2: Stress-test your business concept

Step 1: ResearchMany people are infatuated with their new business idea before they have properly evaluated whether it is worth the time and money they need to invest in it.

An idea should be stress-tested before producing and selling it.

  • Technical feasibility: When considering the technical feasibility you need to know if the technology for your product or service is available or still in development, what possibilities are there that the end user might not want to use your technology and what other technologies could becoming competition in future.
  • Market feasibility: The market feasibility refers to the actual need for what you are selling, how large is the market and how fast it is growing. You need to know who your customer is, what their needs are and the advantages and disadvantages of your product or service over the competition.
  • Financial feasibility: You also need to determine the financial feasibility by determining what the sources of revenue for the business are, what the major costs are for the new business, is there a good profit margin, what capital is required to launch the business, how long the business will take to break-even and you should develop best-case and worst-case scenarios regarding your cash flow. If you are using your business plan to apply for funding, the funder will also want to see that your cash flow will adequately cover your running expenses and enable you to re-pay their loan.
  • Team feasibility: When looking at the team skills you will require to get your business off the ground, you should identify how many people it will take to make your business happen, what cost they will come at and develop a timeline for staffing if your budget does not enable you to hire staff immediately. If you intend to run the business by yourself then determine the skills and expertise you will require (marketing, sales, financial, etc). If you are not equipped with these skills, you should consider bringing a partner on board, outsourcing and/or up-skilling yourself.

Step 4: Writing the business planStep 3: Refine your business concept

Based on the findings from your research and once you have stress-tested your idea, you may have identified weaknesses or opportunities.

The findings will allow you to refine the business idea so that it fills any gaps in the industry, meets market demands, is different from competitor offerings, leverages relationships with partners and suppliers and is financially sustainable.

While a business plan doesn’t automatically guarantee success, it does assist an entrepreneur to avoid many of the common causes of business failure, including undercapitalisation or an inadequate market-share.

While there is no universal business plan template, plans generally include the following sections:

1. Table of Contents

This features the main headings of the business plan and their page numbers for easy reference. Finalise this section last to ensure the numbers are all correct.

2. Executive Summary

The executive summary is a summary of your full business plan. It contains the summary highlights of each section of your. It should also describe the company, provide details about management and their strengths, the business objectives and why it will be successful, and if the business needs external funding, how much is needed, and how it will be repaid. The executive summary is written last and should not exceed two pages in length.

3. General Company Description

This is where you give an overview of the company and the business it engages in. It should include the company’s name, mission statement, goals and objectives, and strengths. If you have a register company name, trademarks, patents, BEE credentials and/or a VAT number include those details here.

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Source: www.entrepreneurmag.co.za
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