Can having a business plan really do anything spectacular for your business or help kick start it especially here in Nigeria? The answer to this question would be resolved shortly but I have a question to ask. What do you understand a business plan to be and how beneficial could it possibly be to you as an entrepreneur?
Many Nigerian entrepreneurs often wonder why it’s hard for them to get their wonderful business idea up and running or why technical partners or investors may not be willing to identify with their idea. The answer obviously is in them not having concrete explanation of what their business truly entails. It’s just like a job applicant with a first degree during an interview who claims he can carry out his duties as a confidential secretary but can’t write a simple complimentary note, because he can’t spell simple words and make a meaningful written sentence with whatever he writes. The interviewers would doubt every other thing you claim. Same way investors or financiers would doubt if an entrepreneur has the credibility to handle finances entrusted in his/her care or if the business at all can work when besides his claim there is no working document to articulate his/her ideas with.
This brings up a very important question – what’s the real benefit of a business plan and how can Nigerian entrepreneurs use them?
Benefits of Business Plans to Nigerian Entrepreneurs
With the advent of YOUWIN, Abuja Business Plan Competition and other special grants programs available locally and with the advent of the promise of incoming Lagos State Governor Akinwunmi Ambode to create a ministry for entrepreneurship and wealth creation, many entrepreneurs with bankable business plans have been and will be able to access grants and low interest loans to start and expand their businesses here in Nigeria but only if they can show a bankable business plan. In summary here are some benefits of business plans for Nigerian Entrepreneurs;
Raise Capital to Start your Business
One of the complaints people have about not being able to start their own businesses is not having capital. Of course a bank isn’t always a choice for startups since they aren’t sure of your ability to survive as a going concern talk more about repaying the loan, so investors or loans from family and friends then become the first choice for raising capital to start a business. Even at that many of them still demand for a business plan.
Sell your ideas to Technical Partners
Another benefit of a business plan is that you can actually pitch your idea to technical partners who based on what your business plan offers them will readily sign up with you in actualizing your dream. Imagine if there is a certain product which isn’t in the Nigerian market yet but Nigerians are known to love it hence it has a high demand locally, a savvy entrepreneur could approach the main company that owns the product abroad and ask to be their representative here in Nigeria or even set up a franchise and in return pay royalties to the parent company. Such an opportunity can be better captured if you have a business plan in place on how you will exploit the opportunity.
Serve as a useful working document
You can see a business plan the same way a torch light guides one in a dark forest through thick bushes or the eye which sees ahead and directs the body towards its destination. This is because even after starting and running your business, there is need to consult on your marketing strategy or management plan. This is usually contained in the business plan document and it foresees challenges and trends both in the present and future. A business plan usually contains all these information and in great detail too thus saving you expensive fees you may have to pay management consultants to help resolve small managerial challenges. For an SME, this is usually a big relief.
Serve as a tool against business failure
At least 68% of new businesses will fail within their first 3 years of operation. What is the biggest cause of failure among them? It’s the absence of a proper blueprint on how the company will manage expenses, handle risks, face the competition, retain customer patronage and even future expansion plans. When you have a business plan that guides you, it’s like reading your bible or a devotional to guide your spiritual journey through life. A business plan functions in a similar way, you can wade off potential failures when you have it with you and it explains how you can succeed and warning signs (like late break even, falling short of financial forecasts and their causes) in case failure is hopping around.
Save yourself from Future avoidable fees
If you start up a business and discover shortly that you omitted certain expenses and requirements but all the money you budgeted for startup is finished what do you do? Go back to the bank or investors and ask for more money? Leave things the way they are and hope they improve or perhaps raising fresh capital from new investors/financiers without informing the other investors/financiers? This new changes is going to cost you money that aside some of the problems you diagnose after starting up and for which you may have to pay business consultants to help you solve may have been envisaged in the business plan.
If you have a business idea and need assistance in preparing a good business plan that can persuade financiers, give me a call: 0803 206 4106 or email me: email@example.com and I’ll walk you through the process.