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Wednesday, 03 July 2013 16:25

Business Plan - is it necessary?

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I have been listening to a debate going on in the business community, especially in the tech start-up area, about the validity of writing a business plan or whether you need one at all. Some people have argued that you should go straight for the market and that most of the business plan was for the investors and bankers. So do you really need a business plan?

Well, the answer really depends on who you are and your experience?

If you are an experienced entrepreneur with several successful ventures under your belt then there is a good chance that you will see many of the pitfalls in advance, gained mainly from painful experience. In my experience these people are also the most skeptical about business proposals and the hardest to impress. However, if you are new to business and entrepreneurship and do not have a depth of institutionalised knowledge built up then I can give you a few good reasons why you should do a business plan:

  •   The business plan itself is probably not the most important thing; it is the process of learning that goes with writing the plan that is the most important. You get to pull the business idea apart in a safe zone when you write the plan and you get to ask all the awkward questions in advance
  •   It allows you to identify the pitfalls in advance; if you are being honest with yourself
  •   More importantly, it allows you to identify gaps in your knowledge. It allows you to go find the outstanding relevant information and then have a bigger picture
  •   For start-up ventures, doing a business plan is a feasibility test on the concept. Always a good idea to check if the idea is commercially sound before you pour good money, time and energy into it
  •   For existing businesses, writing a business plan is a reality check on where you are compared to where you think you are

I run ‘write your own business plan programmes’ because I genuinely believe that it is the process of writing the business plan that is the most important thing, not the finalised document. It is the process of learning and exploring that really helps an entrepreneur or manager to develop themselves and their business. I also recognise that if you get someone else to write your business plan you will get a document but you will have lost the real benefit of the exercise.

So maybe the question is not whether you need to write a business plan but, rather, who you are and what information do you need to find out more about your business, business model, customers and market?   

One final comment:

if you are making a bank application for funding then you need to understand that most banks now assess bank loans in central banking units which mean that you are unlikely to meet or know the people assessing your loan.  The only thing that the bank can assess is the hard documentation that you present to them.  As the business plan is the key document that you give the bank then you must have a business plan in order to be taken seriously.  In reality, without a business plan it is difficult to get a bank loan and this is an important factor for SME owner/managers to take in to consideration.

Read 2884 times Last modified on Wednesday, 03 July 2013 16:44
Ken Germaine

Ken Germaine is a self-employed entrepreneur, management consultant, business advisor, trainer, academic and mentor.  Ken focuses on business planning and helps entrepreneurs and social entrepreneurs to assess the viability of starting and developing their new ventures. 

He worked as an Enterprise Officer with a local development organisation in the late 1990’s and then spent 10 years as CEO of an Enterprise Centre.  He ran his own business when leaving college from 1991 to 1997 and has been a self-employed consultant since February 2010. 

As well as having written books on business planning and selling for entrepreneurs and he writes the start your own business blog (http://startyourownbusienssblog.wordpress.com). 

Ken holds a B.A. (Hons) in politics and economics, as well as an M.A. in political science from University College Dublin (UCD) and a PhD from Trinity College Dublin within economic geography.  He is a fellow and past President of the Institute of Management Consultants and Advisers (www.imca.ie) and is an associate lecturer in NUI Maynooth’s Business School.

To contact Ken email ken@synergy.ie
Ring
01-8215189
Mob: 083-405 1321

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