- October 21, 2019
- Posted by: Arwa Ayyash
- Category: Others
Importance of a Business Plan
“Is it really important to have a business plan?” A question that is being asked frequently in the business world on a regular basis. The answer to the question exceeds a simple “yes/no” as it depends on several factors.
Though, business plans should be customized to each client’s needs and specifications, there are specific elements that should be covered in all business plans. The more sophisticated the business is, the more detailed and organized the plan should be.
The critical elements that are to be included in a business plan can be studied based on the level of sophistication of the business.
1- Simple (under sophisticated) Local Business: The category includes start-ups and SMEs (Small & Medium businesses) with a simple business models, distribution channels and a clear definition of their competitors. Some of the examples include local restaurants, boutique stores, day-care etc.
2 – Sophisticated Businesses: The category includes start-ups or existing businesses with a relatively high capital and requires more complicated business model, procurement and distribution channels. Some of the examples include manufacturing industries, Telecommunications Company, large restaurant giants etc.
Critical Elements of a Business Plan
Some of the critical elements that should be present in a business plan depending on the level of sophistication are listed below:
When we consider a simple start-up such as local restaurant or local store, the biggest concern is the lack of organizational structure, marketing or a financial plan. The only focus on understanding the competitor offerings so that they could adjust their pricing accordingly. The market, consumer and financial feasibility are ignored or not given the importance it requires.
The good practice for such start-ups would be to analyse the competition and prepare a business model that could reflect all its operational aspects. It is also necessary to prepare a revenue and investment forecast so that they have a complete understanding about the business. Even if these elements are not conventionally documented, they should at least have an informal document on these aspects.
There are other variables that drives the need for a business plan, other than “level of sophistication”. In some businesses, there are some “special needs” that require drafting a business plan. One such example is when the entrepreneur is looking for external funding. Drafting a business plan requires mandatory while seeking funds since financial institutions needs to ensure the commercial viability of a proposed venture.
While there are successful start-ups that may not have a written plan, it is required to have at least basic elements of the business plan covered in a written format to ensure that the success over a period of time.
Research Konnection is a market research company in Dubai that assists local and international companies to setup or expand businesses in Dubai, Abu Dhabi and UAE. At Research Konnection, we specialize in Market Research, Feasibility Studies and Business Plan Developments. Feel free to reach out to us on firstname.lastname@example.org