A continuation of our ‘Start your Own Business‘ series, In an extract from his book in Sunday Business Post 25/4/2010, Starting a Business in Ireland, Brian O’Kane asses the viability of your project and the role a business plan has to play in this.
There are plenty of ways of researching whether your project will succeed. All, however, finally require an act of faith from the entrepreneur when the time comes to commit to the business. Before this point is reached, a great deal of planning and careful thought should have been completed.
A well prepared business plan will assist immeasurably with that process simply through the discipline it imposes. Too often, entrepreneurs are carried away with their own enthusiasm. They neglect the most cursory checks on the viability of their idea.
Broad and sometimes rash assumptions are made about issues such as the market for the product, its cost of manufacture, distribution channels and acceptability to customers.
However, when a reasoned written case must be made – even if only to oneself – it is less easy to overlook the unpalatable. At the very least, it is difficult to do so without being aware of the issues.
Documenting the plan
“The plan doesn’t matter, it’s the planning that counts,” said former US president Dwight D Eisenhower. He was right: the quality of the planning you do for your business is critical to its success; how you document that planning process is less so. Nonetheless, a good business plan document actively aids the planning process by providing a structure.
It forces you:
- To cover ground that you might otherwise, in your enthusiasm, skip over
- To clarify your thinking – it is almost impossible to get your plan onto paper until you have formulated it clearly
- To justify your arguments, since they will be written down for others to see
- To focus on the risks and potential for loss in your plans, as well as on the potential for profit and success.
Avoid unnecessary pessimism. Be realistic, but don’t carry caution to extremes. If your proposal is realistic, have confidence in it.
A yardstick for measuring progress
Preparing any plan demands an objective.
An objective assumes that you are going to make some effort to achieve it. Some objectives are quantifiable: if your aim is to sell 500 gadgets, sales of 480 are below target, while 510 units sold gives you reason to feel pleased with your performance.
Other objectives cannot be quantified, which is all the more reason to document them so that you can clearly establish whether or not you have achieved them.
Your business plan should contain the objectives, quantifiable and otherwise, that you have set for your business. Reading through your plan at regular intervals and comparing your performance to date with the objectives you set yourself one month, six months or two years earlier can help to focus your attention on the important things that need to be done if targets are to be achieved.