By Goke Ilesanmi
In this discourse, we will be examining the importance of communicating the viability of your business through effective feasibility studies and business plans. A business plan is a formal document that communicates the direction of a business in a bid to accomplish its most important goal, that is, profitability. Profit does not come by accident. So by writing and keeping to a business plan, you can definitely increase the possibility of achieving profitability.
Whether you want to start a business or grow one, attract investors or obtain a loan, attempting to do it without a well-composed business plan is like a stranger going to a place without prior direction. Or better still, it is like a ship without a rudder (which controls its direction). Let me also illustrate it as a motivational speaker. It is like having a dream without an action plan. The dream cannot become a goal that can be achieved.
To be successful in business, you need to do research and write your business plan; master the key components of a successful plan; understand all your financing options; and streamline the process using easy-to-use templates. A business plan is used for many purposes, that is, as a development tool, a management and planning guide, a mission statement, a sales document, etc., and is read by several different audiences. Therefore, you need to structure the components of your business plan for the greatest impact; anticipate all questions that business plan reviewers will ask; and critique and package your business plan for winning results.
Balanko-Dickson, a third-generation entrepreneur, Licensed Professional Business Coach and founding member of the Professional Business Coaches Alliance, who has clients throughout Canada, the United States, South Africa and the United Kingdom says a business plan has an equation structure of Goals + Research+ Strategy. Developing a detailed business plan will provide you with an opportunity to shape a powerful business development strategy.
The major sections of a business plan are industry analysis; market analysis; products and services; business description; and marketing strategy. Others are operations and management; financial plan; implementation plan; contingency plan; and executive summary. Too often, people invest money in a business only to find out later that there is insufficient demand for the product or that it is not the type that customers want to buy. To reduce this risk of failure and losing money, potential entrepreneurs need to go through the different aspects of running their business in discussions with friends and advisers before they commit funds or try to obtain a loan. This process is known as feasibility study and when the results are written down, the document is known as a business plan.
A feasibility study is the preliminary appraisal of the opportunities and risks that abound in a target area of business. In other words, it is about trying to discover if the target business is profitable or not. For instance, prospective entrepreneurs may have an idea about the type of fruit or vegetable product that they would like to make. This may be as a result of seeing others successfully producing it and therefore wanting to copy them. It may also be as a result of talking to friends and family members about the product they think they can make.
However, having a business idea is not a sufficient reason to begin production straight away, without conducting research into different aspects involved in actually running the business. Conducting a feasibility study requires that the most important aspects of the business be taken into consideration to ensure that potential problems are addressed.
Among the necessary questions that can be asked and answered during the feasibility study are: Is there a demand for the product? (find out the characteristics required of the product and the size and value of the market); Who else is producing similar products? (determine the number and type of competitors); What is needed to make the product? (find the availability and cost of staff, equipment, services, raw materials, ingredients and packaging); What is the cost of producing the product? (Calculate the capital costs of getting started and the operating costs of production); What is the likely profit? (Calculate the difference between the expected income from sales to an estimated share of the market and the costs of production).
Each of these aspects should be examined in turn. When all the information has been gathered and analysed, it would be possible to make a decision on whether the proposed investment in the business is worthwhile or whether the producer’s money could be better spent doing something else. It is also important to remember that the business plan is a working document that should be used as a framework to guide the development of a business. To do this, it should be regularly updated. However, it often happens that once an entrepreneur pays a consultant to prepare a business plan, he or she will just read it once, then keep it somewhere without reviewing it from time to time.
Here, we look at the sub-concepts of product quality survey; survey of market size and value; and market share and competition. Once a producer has decided that he or she wants to start the business, the first thing to do is to find out the likely demand for the fruit or vegetable product that he or she wants to make, by conducting a short market survey. Although there are market research agencies that are able to do this type of work in many developing countries, it is better for the prospective producers to be involved because they will then properly understand their (prospective) customers’ needs and how their business should operate. If an idea is found to be feasible, this knowledge will in turn give them the confidence to go ahead when they encounter challenges, knowing that their product is in demand.
To be continued
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GOKE ILESANMI (FIIM, FIMC, CMC), CEO of Gokmar Communication Consulting, is an International Platinum Columnist, Professional Public Speaker, Career Mgt Coach and Certified Mgt Consultant. He is also a Book Reviewer, Biographer and Editorial Consultant.
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