EnTrends

Many small business owners operate
their businesses without a business plan.
They operate on a day-to-day basis
without any planning for the long term.
They only see the need to prepare one
when they have to approach the bank for
a loan or to tender for a big business
contract.

Is a business plan really necessary? Or is
it just a show-piece to impress the
bankers and business associates? Well,
a well-prepared business plan, usually
drawn up by a management consultant,
does help to impress the bankers. But it
is useless if the management do not
understand the conceptsbehind the
preparation of a business plan.

A business plan is just a static snapshot
of what the business is like if all the
assumptions about the environments and

competitions remain static. But this is not
the case in the real world. Consumers'
expectations, market's supply and
demand, competitions and other
environmental factors change all the
times. We have to modify and adapt our
business strategies and operations
continuously to meet the changing

market conditions.

The true value of business planning lies
not in the plan, but in the concept and
planning process. The same thinking
process can be used again and again to
develop appropriate strategies to take
advantage of the changes in the market
place. Preparing a typical business plan
would involve the following thinking

process.

Step 1: Mission and Objectives

- What do you hope to achieve in the
long run?

- Is this something you enjoy doing for
the rest of your life?

- Identify your mission with a purpose
and not a product.

For eg. to promote good reading habits
among the people is better than being
just a top bookseller. It gives you the
flexibility to expand your business
beyond bookselling toinclude publishing,
educational seminars and others.

- What are the steps or intermediate
objectives needed to reach your ultimate
goal.

Step 2: Competitive Analysis

- Define your market in terms of size,
market potential, growth rate,
competitions, market segments and
others.

- What are the emerging opportunities
and threats in your market?

- Who are the consumers? Any peculiar
buying behaviours? How can you reached
them effectively?

- What are your strengths and weaknesses?

How best can you use your strengths to
overcome the threats and take advantage of

the opportunities? How can you counter the
threats and your weaknesses with the help
of strategic partners?

- Who are your major competitors? What
are their strengths? How can you capitalize
on their weaknesses?

Step 3: Business Plan

- Product or business concept: Answers to
your competitive analysis will help you
identify the market niche for your business.

- Aim for a niche market unless you have the
financial resources to take on the market
leader head-on for a share of the mass
market.

- Profile of consumers in your niche market.

- Market positioning - what do you want
your customers to remember you for?

- Product or service mix - what are you
offering to customers (both tangible &
intangible benefits)?

- Pricing strategy - price is directly
proportional to the product's exclusiveness.

- Order fulfillment and distribution system - a
sale is not complete unless the good is
delivered properly to the consumer within a
reasonable span of time.

- Marketing and sales promotion.

What is your budget? What are the
effective channels to reach your target
consumers? Include advertising, sales

promotion, publicity and sponsorships, and
personal selling.

Step 4: Development Plans

- Organization structure.

- Admin, compensational and operational
policies.

- Immediate plan - identified in step 3. What
are the goals and objectives?

- Mid-term plan - preparing for the next
phase of growth.

- Market penetration - increase our sales in
existing market by encouraging existing
customers to make more purchases and

converting non-buyers.

- Market development - offer our products to
other geographical markets or market
segments.

- Product development - develop new
products that meet the needs of existing
customers.

- Long term plan - Diversification.

Make use of our existing resources to
develop a new business.

Step 5: Financial Projections and Capital
Budgeting

- Prepare a pro-forma balance sheet and
profit & loss statement for your proposed
business.

- The figures must be drawn from
educated guesses based on an in-depth
study of the competitors or industry's
financial performances.

- This exercise will help us manage our
cash flow better as well as determine the
amount of capital required to implement

the plan.

The above guidelines are meant to
illustrate the thinking process behind the
preparation of a business plan. You will

have the business plan drawn up simply
by providing the answers to all the above
questions.

While it may not guarantee success,
business planning helps to enforce
discipline by making you think twice
before taking the plunge. It encourages
you to look inwards and outwards for

answers and to evaluate your business
ideas against various environmental and
competitive constraints. In the process, it

helps to eliminate unnecessary mistakes
and shortcomings.

In addition, the planning process will help
to develop your conceptual and analytical
skills as well as sharpen your mind.

Try it. You may find yourself a few steps
closer to your dream of becoming your
own boss.

The Complete Book of Business Plans by
Joseph A. Covello, etc

http://www.alohacity.com/bookshelf/writi
ng.html

One of the best manual on writing
business plans. Although it is meant for
small business owners who have not
undergone formal business training, the
concept and planning process is

applicable to any business, large or small.
Written in a clear and concise format
supported by useful financial projections,

the book guides readers step-by-step
through the process of conceptual
planning and writing a business plan.

About the author:

Patrick Tan, a former journalist and
entrepreneur, offers a complete range of
e-commerce solutions, services and free

resources to help you build a successful
career online. Visit his site at
http://www.aloha-city.com for more
information. He publishes a free
newsletter to share his experience and

business know-how. Subscribe Now!
mailto:basics@aloha-city.com.