Becoming Wise - Wild & Free: Writing A Successful Business Plan - Part 3 - The Feasibility
By: Rod Francis | Posted: 24th August 2005
Becoming Wise - Wild & Free: Writing A Successful Business Plan - Part 3 - The Feasibility Copyright © 2005 Rod Francis Advantage Venture Systems Inc. http://www.vpspro.com/
I am amazed at how many resources there are and how much
information is available today on writing a business plan. There
is software, documents, templates, outlines and a lot of experts
that can help you. Most experts and resources will tell you
exactly how to write a business plan and maybe even provide a
template that only needs minor changes to fit your needs. All
the emphasis is put on "writing" a solid business plan.
I agree that you need a good business plan but I don't believe
that you need to spend hours, days or even months writing your
story so that people can read all about what you are going to do.
In the first place, most of the people that are going to read
your plan are bankers or investors that are not so much
interested in your story as they are in whether you will succeed.
Secondly, you may spend a lot of time writing this great and
wonderful story only to find at the end that you cannot make it
work.
You need to start by analyzing the feasibility of your
prospective business by using good software or a professional
that can help you do the research and develop a set of
projections that will be sure you have covered everything. Most
businesses fail because they have not accurately projected their
cash flow needs and perhaps because they have not been realistic
in their projection of sales and expenses. Remember that writing
a good plan is about first doing it for yourself.
For your plan to be feasible you have to decide what goals you
want to accomplish and how you will get there. For instance, you
may now have a job that provides you with a steady income. How
much must your business make to replace that income and how long
can you survive if your income is reduced? Can the project make
enough money to satisfy the needs of investors? Investors
typically want higher than normal returns on a high-risk
investment like a start-up business. Can you meet the loan
payments that are required and do you have sufficient equity in
the business to satisfy the lender requirements in order to get
the loan in the first place? Lenders will look critically at
your cash flow and the amount of cash and assets you have
invested in the business.
Several years ago I had a newly expanded business that in the
first year of expansion increased sales by 50% and produced a
substantial profit in the same year. The problem was that I did
not properly project the cash flow needs and ended up in a
position where I could not pay the bills or payments. How could
this be? I asked myself the same question when I had to shut the
business down. That is when I first learned about the importance
of projections and analyzing the feasibility before leaping in.
An inch from success will not get you where you want to be.
Take your time to do your projections and research each and every
aspect of your business. It is not just guess work. In fact,
you can be very accurate with all your costs and expenses. If
you talk to all of the appropriate professionals, suppliers and
service providers you will probably be as accurate as possible in
most areas of your projections. The area that requires the most
research is sales but, there are good techniques to come up with
accurate estimates.
If you have researched and prepared your projections correctly
and your business is feasible you have done a whole lot more than
just create a financial projection. You have discovered what it
takes to make your business work, you have created a network of
professionals to assist you in the success of your business, and
now it is easy to write the rest of the story. So, when you set
out to "write" your business plan, start with the feasibility
because it will tell you a lot about your business before you
even get started. If it looks good you will be able to sell it
to the bankers and investors. But, if it doesn't look good you
haven't wasted a lot of time writing a fiction novel.
Look for the next article on Writing A Successful Business Plan - Part 4 - "What are Projections" of the Becoming Wise - Wild &
Free series.
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Written by Rod Francis - President of Advantage Venture Systems
Inc. creators of the Venture Planning System(tm) Pro business
plan software @ www.VPSpro.com Suite 207, #1-1081 Central Ave.
N., Swift Current, SK Canada S9H 4Z1
Check for more articles on writing a business plan at:
http://www.vpspro.com/business_plan_articles.htmlAbout the Author
Rod Francis
Occupation:
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Tags: job, successful business, good business, enough money, investors, minor changes, cash flow, outlines, good software, feasibility, writing a business plan, how to write a business plan, free writing, prospective business, wonderful story