This is the second part in a series of 5 on writing business plans.
Preparing a business plan benefits a B4Ter in at least six ways.
- A Map
A business plan is like a map; once it is complete you can follow the directions to your destination. The business plan is a written summary of what you hope to accomplish by being in business and how you intend to organize your resources to meet your goals. It is the road map for operating your business and measuring progress along the way. The business plan identifies the amount of financing or outside investment required and when it is needed.
A plan enables you to concentrate your efforts on deviations from the plan before conditions become critical. A plan also creates room to look ahead so as to anticipate and avoid problems before they occur. The plan lays out your goals and action steps, allowing you to guide your business through turbulent economic seas and into the harbors of your choice. The alternative is drifting into any old port in a storm.
A business plan provides information to interested parties, whether they are potential team members, investors, or consultants. The business plan is a tool that communicates your ideas to others. The plan clarifies for others the basic needs and opportunities for the business as the company begins to move forward. The plan serves as an understandable guide to operations and a source of direction that can be modified as the business evolves. The plan can also be used to inform and orient sales personnel, employees, suppliers, and others about your operations and goals.
- Raise Capital
First impressions are important. A well-organized business plan is essential for a lender or investor to assess your financing proposal and to assess you as a business owner. The plan reveals how well you understand your true financial needs. It conveys the opportunities for profit that can be gained from the market, as well as your own experience and strengths along with the people working with you. By reading the details of the plan, investors gain clear insight into where you are heading with the business. It provides prospective investors the means to determine whether your company is a wise and suitable investment.
There are thousands of businesspeople who do not want to donate to BAM businesses, but they will invest if they believe they can receive a return on their investment. One key to unlocking their money is the business plan. When businesspeople learn of an investment opportunity the first thing they ask for is the business plan. While few invest solely based on the business plan, a good plan will get your foot in the door to further discussions with prospective investors. If you wish to raise money from outside your small circle of family and friends, it is essential to have a business plan.
- Reality Check
The business plan helps you determine whether or not your business is viable on paper before you encounter mistakes in the “real world” so that you can adjust accordingly. The plan enables you to think through the entire business and reveals the business’s potential strengths and weaknesses before investing any time or money. It demonstrates your credibility and your attention to detail and will generate excitement and enthusiasm for the business. Therefore, the business plan must be as realistic and accurate as possible. Charlie, one of our first apprentices, worked eight weeks on a business plan. It was well done and thoroughly researched, only for him to realize that this business was not going to ever be profitable in the country God assigned him. Several times he said to me, “I wasted two months!” But I replied, “No, you saved yourself a hundred thousand dollars and maybe a year of your life; those eight weeks were a great investment!”
- Personal Development
A business plan can help you develop as a manager. It can give you practice in thinking about competitive conditions, promotional opportunities, and ways of working in the real-world cross-culturally. The research involved should provide you with a better understanding of the industry, the business, and the community you are moving into.
A good business plan provides accountability for you and your investors. The plan lays out a timeline of events and financial milestones against which you can compare your actual results. As the owner/manager you will have to give an answer to investors for whatever unfolds. The business plan defines the parameters of success for the business.
Businesses have to be run for the customer; most churches and missionaries do not understand this. The plan states the priorities and strategies for starting and growing the business. It integrates the secular and sacred objectives of the B4T endeavor. Dan, working in China, points out, “Listen to what your customers are telling you. Remember, without them you do not have a business. And do not forget to show your appreciation for their business and their referrals—it takes a lot more money to create a new customer than it does to keep a current one.”
Bear in mind that anything you leave out of the picture will create an additional cost, or be a drain on your money when it crops up later. If you leave out or ignore enough items, the business may fail.
If you don’t have a business plan and are a little overwhelmed by the prospect of completing one from scratch, there is help. Both the OPEN Network (services@theOPENservices.net) and IBEC (Robert.Bush@ibecventures.com) have coaches who understand the B4T world and who will assist you.