Discovering New Business Opportunities by John W. English

Author:John W. English
Language: eng
Format: epub
Tags: BUS000000, BUS020000
ISBN: 9781741765656
Publisher: Allen & Unwin Pty Ltd
Published: 2009-05-01T00:00:00+00:00

Planning risk

To minimise planning risk, you need to seriously organise how you will go about commercialising your idea. This means developing a business plan. A business plan contains a strategy for the development and operation of a business opportunity. It is a blueprint for making the transition from an initial idea to a successful enterprise. It is the result of research, deliberation and a vision about the results you expect to achieve. It represents concrete tactics for creating competitive strength and exploiting it. A business plan identifies the characteristics of the market and the marketing strategies you will employ to capture it. It includes plans for the facilities, staff and procedures to operate the business, together with forecasts of the resulting profits and cash flow. It is not unusual for a realistic business plan to take several months to complete.

Planning is important because it helps you work smarter rather than harder. It keeps you future oriented and motivates you to achieve the results you want. Moreover, the process of completing a business plan enables you to determine what commitment you are prepared to make to the business. Planning significantly increases your chances for survival and prosperity by focusing your attention on the following areas in which new business operators sometimes get lost:

Realism: It is easy to become excessively optimistic about a new idea. Planning helps to prevent you from viewing the future in ways that the facts do not support. Sometimes the big pay-off is that a genuine planning exercise might save you from yourself by persuading you to abandon a bad idea while your mistakes are still only on paper.

The need for outside advice: Planning enables you to recognise problems that call for outside sources of information and assistance.

Recognising change: The nature of markets and consumer needs can change rapidly. Planning cannot predict change, but it helps you to recognise it and to construct your business strategy accordingly.

Balancing growth: New businesses tend to grow either too fast for their capital base or too slow to maintain cash flow. Planning helps you to achieve smooth growth and to avoid unexpected crises.

Results orientation: A business plan enables you to monitor your results against a set of goals and performance standards.

Obtaining finance: When someone puts money into your business they want to know what to expect. A business plan not only enables you to plan your capital needs in advance, but it also provides the information that an investor or lender needs to evaluate your request for finance.

Most of the books that have been written about business planning are designed for cash-hungry start-up situations in which a 100-page document is needed to pry money out of a tight-fisted venture capital organisation. That kind of business plan is simply irrelevant to the vast majority of new business opportunities. There are also a number of other myths about business planning. The first myth is that a business plan is some sort of guarantee of success. The reality is that no matter what you do there is always going to be a risk of failure.

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