Hello followers. Welcome to another day of our CEREALS BUSINESS TRAINING.
Business planning is a very important part of every business venture and that is why you hear about it very often.
Unfortunately, most people who think about starting a business usually don`t consider writing a business plan.
I have read from different business experts about the fact that most start-up entrepreneurs do not write a business plan but what I have not read from anyone is why this is so.
Why is it that most people have fear (so to say) about writing a business plan?
I know the answer.
You see, there are many myths and lies you probably have heard about the subject of business plan. Some people present business plan as if it was a university thesis or an academic report to be defended before certain professors.
Other people think that a business plan has to be 50 pages long and that it must be written in a certain “approved” format.
Well, I am here to tell you that all those opinions are not valid.
Because there are some ugly lies around this important business step, most people are “afraid” of doing it
Journey with me as i will reveal the real truth about business plan and at the end of today`s training, you will discover that it is actually easy to write a business plan.
Starting a business is a serious project that often requires huge investments of our time, effort and money. If you want to reduce the chances of failure and improve the odds of success, planning is a must!
If nine out of ten new businesses fail within their first two years, don’t you think good planning can make you ‘lucky’?
Studies show that new businesses that have a plan double their chances of success and are more likely to raise more capital than businesses without a plan.
So, why is it that very few entrepreneurs ever take the time to write a plan for their brilliant business idea?
Well, half of us don’t really know what a business plan is and the other half needs help to write one.
There are three main reasons why anyone may need a business plan.
First, if you are about to start a business and you want to convince certain people to give you capital. In this case, you will want to use your business plan to “sell” your business idea to the investors so that they will be willing to finance your business.
Second, if you want to start a business and you want to be successful. Though you don`t need external investors, you obviously need to grow, to compete and to win the battle of the market place. You need a business plan.
Third, you may need a new business plan because the economic or market situation has made your last plans obsolete. Yes, a business plan is not like an academic paper which may stand for many years and still be relevant.
I wrote a business plan last year (I think April) and by December, it was already obsolete.
Why?
You really don`t know tomorrow. Your projections, plans or tactics are dependent on many factors that are beyond your power and when things change that affect your business (positively or negatively), then your plans also must be re-written.
You can think of a business plan as a roadmap that shows the direction from where you are (idea stage) to where you want to be (successful and profitable business).
A business plan is not the long, complex and scary document many people think it is. In fact, a great business plan can be as simple as a one-page document and could also be a long 100-page presentation. It all depends on its purpose and target audience.
Important reasons why you must have your own business plan…
#1 – You need it
The most important benefit of a business plan is that it helps you to put all those beautiful dreams and ideas you have for your business on paper.
Contrary to what you may think; the business plans you have in your head and on paper are not the same. Taking the time to write down a plan for your business forces you to organize and refine your thoughts.
For the very first time, you will be able to see how everything is connected, and some important things you never really thought about will start to stand out.
On a mental level, writing a business plan will make you take yourself more seriously. Investing time, energy and focus to prepare a plan on paper feels like signing a contract with yourself. It increases the confidence and belief you have in your business idea and focuses your mind on those critical things that are obviously missing.
Before you have a plan on paper, all the ideas and plans you have for your business live inside your head. The problem is that they keep swirling around in a random and disorganized fashion. But when you have finished preparing your business plan, it feels like you have a map to your ‘promised land’ with a clear direction and a laser focus.
A business Plan helps you find the gaps in your idea and focus on the things that are really important.
When you interact with an entrepreneur who has taken the time to prepare a business plan, you will know. She is usually more articulate, confident and knows the business like the back of her hand because she can visualize the roadmap in her head. This is what you get when you go through the rigour of preparing a proper business plan.
#2 – Banks and investors will want to see it
Depending on the amount of capital you’re asking for, most investors (including your mom) may want to see a plan that proves to them you know what you’re talking about.
Banks and formal investors (like angels and venture capitalists) want to know if your business can make enough profits to pay back a loan (with interest) and provide a good return on an investor’s investment.
Banks and investors would want to see your marketing plan. They want to see the profiles of the people who will run and manage the business/company. They want to see a cashflow forecast and your projected profits for the next 3 to 5 years. They want to see that you have analyzed your competition and have a plan for your products and services.
Banks and investors will want to see all these things (and more) to convince themselves that your business deserves a loan or it is worth investing in.
Above all, having a well-prepared business plan is often a sign that you are a serious, organized and disciplined person. This is usually the kind of person investors and banks will want to give their money to.
Most people make the common mistake of thinking that business plans are only for startup businesses looking to raise capital.
Big lie! Even established companies need business plans too.
Plans are useful at every stage in the life of a business, whether it’s looking for startup capital or considering options to expand.
In today`s training, we shall look at the powerful things a business plan can and will do for you. Whether you’re still at the idea stage or have an existing business you want to grow and expand, I’m sure you will find great value in the things you’re about to read.
First, a few important questions…
Why do many entrepreneurs who have brilliant business ideas never find the capital to transform their ideas into real-life businesses?
Why do most startup businesses fail to attract the loans and investments they need to grow and succeed?
Why do more than 80 percent of businesses fail within their first five years?
One simple answer:
Many of them didn’t have a plan.
Like most people who travel to an unknown destination without a map, guide or directions, these businesses got lost and never reached their destination (success).
A business is not a hobby or playful adventure. As an important venture that requires an investment of time, effort and money, entrepreneurs just have to take business planning very seriously.
One thing is clear: planning is a habit of ALL successful businesses that still exist today!
Five main benefits of a business plan for you.
1. A Business Plan is a Strong Commitment
“It pays to plan ahead. It wasn’t raining when Noah built the ark.” – Peter F Drucker –
According to data from the Panel Study of Entrepreneurial Dynamics, which involved a survey of more than 800 people in the process of starting businesses, writing a plan greatly increases the chances that a person would actually go into business.
Entrepreneurs who have the discipline to prepare a business plan are two and a half times more likely to get into business.
That’s powerful!
Writing a business plan helps you to focus and fight procrastination. Investing time and effort in researching your target market, analyzing your competitors and estimating profit figures is bound to increase your interest in bringing your business idea to life.
A business plan has the power to positively affect your mindset.
When an idea is left undeveloped, it starts to lose significance. As you gather information about your business, you start to develop a strong level of confidence and ‘can-do’ spirit around your business idea. You will experience less fear and see more possibilities in your idea.
Whether you plan to start a business from scratch or want to expand an already established business, a plan will keep you interested, focused, committed and determined to take action.
2. A Business Plan Helps To Develop Your Idea
“Planning is bringing the future into the present so that you can do something about it now.” – Alan Lakein –
When you first have an idea, it exists as a cloud of thought in your mind.
The problem with thoughts is if you don’t write them down, you may forget or never remember them entirely.
So you decide to write down your brilliant business idea on a piece of paper (or in MSWord on your laptop). Yes, finally, it can never be lost or forgotten!
The problem is, what you have written is just an idea, and it’s not the same thing as a real life business. To become a real business, certain actions and investments of time, effort and money must happen to transform your beautiful idea into a successful business.
How will you start? How much will you need and who will you get it from?
What kind of customers will you target? Who is your competition and what will you do to protect your business from them?
Are there any licenses, permits or government approvals you need before you start? Who will be responsible for what?
All of these are important questions that must be answered in order to transform your idea into a real business.
A business plan allows you to see your business from the top and understand how all the elements will fit into one another.
The most important thing that every plan does is to bring your attention to gaps and holes you may have missed because they didn’t seem very apparent in the beginning. In fact, business plans often bring up interesting and creative alternatives that could make your original idea much better and powerful.
3. A Business Plan Makes You Prepared And More Likely To Succeed
“To be prepared is half the victory.” – Miguel de Cervantes Saavedra –
I just love Toyota because it’s definitely one the most successful car brands in the world. Year after year, it continues to release the most beautiful and reliable ‘driving machines’ my eyes have ever seen!
Like most car manufacturers, Toyota invests a lot of time, effort and money in the early stages of developing every new car model.
A couple of years before the new model is released, Toyota’s engineers and specialists brainstorm tirelessly on different aspects of the new car model, especially in the areas of comfort, safety, speed, control and beauty.
Why doesn’t Toyota just go ahead and build the car? After all, it has a top team of highly talented and experienced designers, engineers and technicians. With all its talent and experience, why does Toyota still spend all that time, effort and money in planning?
Toyota is serious about planning because it knows planning is always required for success. It knows planning is critical to build cars that people will love and be happy to buy. It invests in
planning at the early stages because it knows that’s the best way to build something that will beat the competition. And guess what, it always works!
Toyota is always prepared; that’s why it always succeeds!
Abraham Lincoln, one of the greatest presidents of America that ever lived, once said:
“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.”
What does this tell you about planning? Unless you plan to waste time and suffer the emotional trauma of mistakes, investing in planning usually leads to better preparedness, fewer surprises and a higher likelihood for success.
4. A Business Plan Keeps You and Your Business Accountable
“Proper planning prevents poor performance.” – Charlie Batch –
You are very likely to be the biggest risk to your business. Yes, you! Because you are answerable to no one in your business, there’s usually that temptation to take the business for granted. It’s your idea and your business. Everybody answers to you because you’re the boss almighty. But who do you answer to?
Unlike your employees who can be fired, there’s no punishment and nothing to hold you accountable if you procrastinate, backslide or fail to meet targets and deadlines.
A business plan allows you to set goals and track your progress and levels of achievement over time. Without this accountability, your business will always be subject to guesses and impulsive actions and will definitely perform below its best potentials.
People who set Specific, Measurable and Time-bound (SMT) targets for themselves usually perform much better than others. If I plan to lose 5 kilograms (11 pounds) of weight in one week, that’s an SMT target.
If I start on Sunday and by Wednesday, I notice I have lost only one kilogram, I would be moved to increase my efforts because I know it would be impossible to achieve my target if I continued at my current pace.
Because I know my target is time-bound (1 week), there will be more urgency in my attitude to meet this target. And when I meet my targets, I make progress; which is exactly the result I want!
A business plan is the only way I know for entrepreneurs and businesses to hold themselves accountable using Specific, Measurable and Time-bound targets. It’s the best way to eliminate procrastination, reduce the fear of failure and inspire yourself to take quick and bold actions that will make your dream business come true!
5. A Business Plan Increases Your Chances of Raising Capital
“Good fortune is what happens when opportunity meets with planning.” – Thomas Edison –
Nobody can read your mind. This includes potential business partners, bank loan officers, investors and other people who can provide the capital you need to start or expand your business.
How can you bring out that brilliant business idea from your mind and present it to these people in a way that convinces them to invest in and support your business?
Well, there’s an easy option. Why don’t you just open your mouth and tell them the whole story.
Hahahaa!
Most people who try this will surely end up confused and stammering.
Why put yourself through this trouble when you can have a business plan do all the talking for you?
A plan is the most effective way to communicate your business idea to other people in a clear, complete and convincing manner. It’s no longer that odd idea you had in your head. It’s now on paper. It’s concrete proof to anyone who sees it!
Partners, investors and bankers are more likely to take you seriously if you have a well-written and professional business plan.
Banks and investors actually take business plans very seriously. Why? Because the information it provides helps them to properly measure the risk of investing in your business.
Banks and investors take calculated risks; they are not gamblers. It’s highly unlikely that they will give you their money and hope that your business is successful and turns a profit.
Anybody who’s interested in your business idea wants to see that you have taken the time to do a proper and detailed planning. They want to see your Profit Forecasts. They are interested in your Competitive Analysis and the quality of experience you have to successfully run the business.
The more information they have, the more convincing your business dream becomes to them.
Whether you are applying for a bank loan, looking for a partner or venture capitalist to invest in your business, applying for a government loan or grant, or entering for a fundraising competition, you stand a better chance of winning and raising the capital you need if you have a well-written and professional looking business plan.
Do You Have A Business Plan?
“Failing to plan is planning to fail.” – Alan Lakein –
A business plan is not just a fundraising tool or that boring document that only big businesses write. It’s for everybody!
It’s for the young lady who has been nursing an idea and wants to quit her job to start a cereals retail business.
It’s for that man who has been running a Cereals business for three years but now wants to expand his business and take it to the next level.
A dream is still a dream until it leaves your head and becomes a Specific, Measurable and Time-bound plan.
HOW LONG SHOULD A BUSINESS PLAN BE?
It all depends on your objective and who will read it.
The last business plan I wrote was written on a single sheet of A4 paper. I typed and printed it out.
If you intend to write a business plan for yourself and not to convince any investor, I strongly recommend that you write your business plan in a single sheet of paper or two, worst, three.
I know this is a strange advice so let me explain.
You see, human nature loves complexity while simplicity is the only valuable thing.
Anything that is too complex will give you stress and then become a burden on you, then you’ll abandon it … making it useless.
If you are planning to write a business plan for your own usefulness, you will have to review it often (or else you won’t even follow it), so tell me, which document is easier to review, a ten pages document or two?
You know the answer.
What if you want to write a business plan to convince the investors?
Some people will advise you to write 50 pages and some other entrepreneurs might have written 100 pages in the past, but let me tell you the truth, nobody has time to read your thesis except the university professors.
The only people who have so much time are the poor people and I am sure if at all you want to use your business plan to get an investor to finance your business, then you are talking about someone who is (probably) very busy.
Let me tell you this so that you will understand what I am saying here. Many CVs have been submitted to me by job seekers in the past and I am sure they would have prepared those CVs thinking, “I will impress the employers”.
Well, here comes the sad news … I have never in my life read a CV, I scan through them. I don`t have time.
Your business plan is like the CV for the job seekers. How long should it be?
Its again depends on who will read it. 10 pages may help you. 15 pages may help you, but when you`re going beyond 20 pages, I am out!
If you forget everything, make sure you don`t forget this… the investors you will give your business plan, really don`t have time.
HOW MANY YEARS SHOULD A BUSINESS PLAN BE?
Another area where people miss it. They are writing 5 or 10 years business plan. I laugh.
Think about planning for your business the way you think about goals for your life.
When I first learned about goal setting, I was impressed and I started by writing 5 to 10 years goals.
I was wrong.
It never worked. I later started writing one year goals and now I am writing goals for a third of the year (4 months).
The reason is simple… you`re a human being like all of us. What you think/plan may not happen the way you plan it.
Any business plan that is more than one year is actually questionable. That is my opinion.
Any other business expert may tell you something different.
Let me cross out a popular lie about a business plan. Most people believe that if your business plan is well written, it will win you huge amount of money from the investors.
This is like telling a graduate, hey, if you can write your CV very well, you will be employed in a big company.
I hate certificates and CVs, and every single time people have submitted them to me, I have asked myself, what value can this man/woman give us (our business)?
Do you think I am the only one with this mindset?
Do you think your intending investors will be bought by a super-written plan? Think again.
Most investors will rather judge your five sentences than your 50 pages plans. That doesn’t mean that you shouldn’t write your plan very well. It simply means that you have more to do than just writing a plan.
You have to understand in and out, front and back, up and down of your intended business.
In fact, the written plan is nothing but the abstract of what is in your head, or else, you`ll fail in your attempt to convince business partners or investors to help finance your business.
Some people believe that a business plan is what anyone (an expert) can sit down somewhere and just write for them.
Someone called me sometimes ago and that was what he wanted me to do for him. If I write a “superb” plan for you, will I still be the one to defend it when your investors ask you questions?
That is why the first task you have is to understand your business very well.
SEVEN THINGS THAT YOUR BUSINESS PLAN SHOULD CONTAIN.
I will not write any complex term or academic jargon here (because I believe the world is not complex)
1. Your business name/title.
This is obvious. Example… Muguku Cereals Business Plan
2. Objective/summary.
They call this Executive Summary, but don’t be deceived by this name. It simply means, why you are writing this plan.
What do you want to achieve with your plan? If you’re giving it to an investor, what do you want from him?
Constructively state your objective here. If you are giving your plan to someone you want to convince to partner with you, state your objective and if your intention is to get him to finance your business venture, state that here.
3. Business description.
What and what is your business all about? What are the future possibilities and threats in your business?
Describe your intending business here.
4. Market strategy.
An investor expects you to be familiar with your product/service and market.
He wants you to convince him of your intending marketing strategies. How do you intend to win a good market share for your produce? This is very important, even if you are not presenting your plan to any investor.
I advise you to conduct a market analysis. What that simply means is that you should spend time to research and understand your market, then position yourself with the tactics to win. That`s what an investor wants you to tell him here.
5. Competitors` analysis.
Here, an investor will want you to convince him that you understand the strengths and weaknesses of your competitors.
Some people come up with a formula they call SWORT analysis.
It simply means that you should analyze the Strengths, Weaknesses, Opportunity, Reward and the Threats in the market place.
This will help you to know how to play your business game and if you will be presenting your business plan to an investor, this will encourage him that you actually understand your “enemies” and you are able to kill them.
6. Your people.
If I want to invest with you, won’t I have interest in knowing who and who will be part of your agribusiness team? That is what you will want to write here.
Who will be doing what, who will be handle what and who will be employed later to take care of what? These are the answers you have to provide here.
7. Financial situations and forecasts.
Here you will want to write about the financial requirements of your business, amount on ground now and what and what is needed.
There you have it. A guide that can help you to write a good agribusiness plan.
Click on the link below for sample Business plans that can act as a guide for you on how business plans look like.
https://www.profitableventure.com/business-plans
END OF DAY 4 CEREALS BUSINESS TEACHING SESSION
We now come to the end of today`s teaching session, The PDF of this teaching is available here. Please comment your thoughts and questions below.
