Topic 6: Business Planning
Failure to plan is a plan to fail. In order to avoid business failure. business owners, managers, and promoters use business plans. Developing a business plan enables the planning of all business activities to be conducted at a certain time. In this chapter, you will learn about identification of business opportunities and business plan development. The competences developed will enable you to develop u business plan for a medium-sized business.
Identification of business oppurtunities
Business opportunities consist of attractive avenues in the environment, which provide entrepreneurs with the potential for effective business idea development. A promising opportunity always begins with brilliant business ideas. So, while a business idea is a creative thought or concept, an opportunity is an evaluated and promising idea.
It portrays a chance to bring that idea to life and make it a reality. Identification of appropriate business opportunities is an important aspeet to business because it enables the entrepreneurs to identify and focus on what customers are missing. An entrepreneur can identify business ideas by scanning the environment for unsatisfied or unfulfilled needs as well as considering customers’ complaints ahout existing businesses.
Once ideas are effectively evaluated on the bases of market potential, competition, resources, and ability of the entrepreneur to pursue the idea, then ideas graduate to opportunities.
Thus, the process of generating good business idea(s) involve a number of processes such as brainstorming to coming up with a number of initial ideas. sereening those business ideas, ranking of those business ideas, and mind-mapping the selected husiness idea on a business model, like Business Model Canvas (BMC). Figure 6.1 provides a summary of the processes which facilitate gencration of business ideas.
Business plan development
A business plan is developed using the business opportunity generated from the business ideas. Once an entrepreneur has generated a viable business idea, then, the development of a business plan starts. The business plan document involves the following components: business description, industrial analysis, market assessment, marketing plan, operations plan, management and organisational plan, and financial plan.
Business description entails the hasic information ahout the business including the product (s) offered, owner(s), and location of the business. Market assessment provides information on the extent of product demand in the market as well as the industrial analysis. Market assessment mainly focuses on determining strengths, weaknesses, opportunities, and threats in the market.
Based on the market status information obtained during the market assessment. an entrepreneur may decide on the marketing plan and strategies to be used in generating more customers (markets) for the product(s). The operation plan focuses on how the product (s) will be produced and delivered to the customers. The organisational plan provides the human resourees needed and their roles for the implementation of the business.
Finally, the financial plan refleets cost implications of all items from all sections of the business plan in order to inform the prospective financial performance of the business.