GURU MANTRA
Mr. Kiran Pedada Consultant - CTLC ISB, Hyderabad Business Plan: An Essential Tool for Entrepreneurial Success
Many people believe that business plan is a selling tool that helps them in attracting potential investors and raising funds. However, a recently conducted research by a venture capitalist shows that only 2 plans out of every 100 plans submitted for fund raising are eligible for funding. It is important to understand that business plan is not just a sales presentation that will act as a tool for selling your idea and attracting an investor but it is also a road-map that lays out the vision for your venture, provides you direction, and persuades others to help you in achieving the goals. One of the primary reasons to write a good business plan is that it will help you put your thoughts and ideas on a paper. When you start putting your thoughts on paper, you will start answering questions that include What value are you going to create to your target customer and to other stakeholders? What are your revenue sources? How big is your market? Who are your competitors? What are the perceived risks and how to mitigate them? How much money you may need to start the business? How much return is expected? How many people will you recruit? Overall, writing a good business plan helps you think through the details of the venture, provides you with the direction to design and implement the strategies for the organization, and thus improves the chances of winning a potential investment opportunity. So, what are the essential parts of a good business plan? Team One of the most important success factors for an entrepreneurial venture is its team and the team’s ability to craft a vision for the company, set organizational goals, and develop a strategic business plan to achieve the goals. Investors often invest in people, not ideas. In one of his classes, a professor of Entrepreneurship stated “An A Class team with a B Class
idea is more likely to be successful than a B Class team with an A Class idea.” Uniqueness of the Product / Service The success or failure of a product depends upon how the end customer will respond to it. It’s the customer who decides the success or failure of a product. It is important to understand how unique is your product (or) service in comparison with competitors’ products and what value is created to the target customers.
Economic Potential A clear assessment of market and competitors helps in understanding the economic potential of the venture. Conducting a market research study helps in estimating the market size and growth potential, and analyzsing the competitors and other external factors that affect the success of the venture. Marketing You may be having the best product and great market for it, but without having a good marketing plan, you may not be truly successful. Marketing helps a good product reach its target customers at the right place with the right price at the right time. It acts as an action plan to implement the perfect marketing mix4Ps (Product, Price, Place, and Promotion) strategies. Business Model and Financials Business model helps in understanding the revenue model (sources of revenue). Financial projections provide forecasts of cash flows, profit and loss, and returns. It also gives an outline of future balance sheet and evaluates exit options. Risk Assessment Risk assessment identifies the venture’s main concerns and tries to evaluate and quantify the perceived risk. It also provides the necessary strategies to mitigate the risk. A good risk assessment plan enhances the credibility of the venture and wins the confidence of a potential investor. Implementation Plan Developing an implementation plan not only helps in systematically planning the activities but also helps with subsequent monitoring of the project. It gives a clear road map for the project and describes the most important activities and milestones of the project.
iNM - Magazine
2