Business Plan FAQs
1. What is meant by a "Business Plan"?
A "Business Plan" is a written plan by an entrepreneur outlining
his vision and how the business is to be managed to achieve its objectives.
2. Do small companies need to produce business plans?
Yes. All businesses, whether a start-up or existing, should have a
plan to maximize help guide operations and maximize profits. The plan
will serve as a management tool for the entrepreneur.
The owner should also involve his key employees in the budgeting and
planning processes. A joint effort between the management and key employees
will foster commitment and accountability by the employees.
3. When should you do a business plan?
You should produce a business plan under the following circumstances:
a. Prior to setting-up a new business, the expansion of capacity,
or the introduction of a new product or service.
b. Annually to access business performance and plan for the next year.
4. Who are the likely users of the business plan?
Other than the owner of the business, the other interested parties
will be :-
The existing employees
These people have an interest in their current and future job security
and prospects in the company. They need clear business direction and
goals for accountability and they need to feel confident of the management's
leadership.
Potential investors
Potential investors must feel confident that their investment will
bring returns.
Banks
To approve your loan application.
5. What are the key areas and focus of a business plan?
The key areas are:
· Business model, products and services, visions and goals
· Current position of company, in relation to the market and
competition
· Key success factors
· Financing requirements
The length and focus of a business plan will depend on the audience
it is supposed to address, i.e. the owner for his own use; the potential
investor(s) to inject equity in the business; or the banker to approve
a loan application.
The business plan should not be so detailed and full of statistics
itl takes the focus away from the big picture and the critical issues.
The business plan should be concise and focus on key areas for development
to be ahead of the competition.
6. What will banks normally look for in a business plan ?
Banks normally will analyze the business plan to determine:
· the viability of the business;
· whether the risks are acceptable, based on the lending guidelines
of the bank;
· whether the loan can be repaid and is profitable for the
bank;
· whether the loan is for productive purposes and business
development.
Under the above lending principles, the five C's of credit will be
assessed. (See our separate article on the five C’s)
7. What advise can you offer to help ensure my business plan
meets the bank's aarequirements?
Banks normally look out for:
· A clear business direction;
· Focus on key areas for development to be ahead of the competition;
· Cash flow requirements / projections;
· Realistic and prudent sales and profit projections.
See our Ordering Information page for info
on how to procure our services.
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