Tuesday 25 November 2008
A Structured Approach to Building a Business
The Business Plan
Have you or do you know anybody that has written a losing business plan?
A business plan is a necessity that is associated with the development of most new ideas or initiatives. Most often the business plan is written by the inventor or creator, which makes their view of the product and the coupled business plan biased.
Typically a spreadsheet quantifying the opportunity identified by the product is the final page of a business plan. What happens when the numbers that are “run” give an outcome that is not quite as good as expected … easy, change the numbers to get the result you always knew would be correct!
Unfortunately the above scenario occurs all too often. Not surprisingly most new ventures, even those supported by a “winning business plan”, usually fail.
Market failure is the biggest risk
The single biggest reason that a product or idea does not succeed is market failure – the market is not receptive to the idea or product.
There have been some classic market failures, even after the most in-depth and rigorous market research. For example, the much heralded Apple Newton and the SEGWAY two wheel transporters were less than impressive in the commercial realities of consumerism.
Why bother with a Business Plan?
A valid question may then be, “why bother with the business plan at all” or ”how can the risks associated with writing a business plan be reduced?”
Business plans are the start of the journey and are usually demanded, especially by astute investors as a test of your commitment and competence. It is often said, investors invest in people more so than the opportunity. A business plan is a necessary test of your capabilities in developing a logical plan that considers all the important issues and presents a sound business case.
At this point, perhaps we should perhaps dispel the common myth that if we persist we will succeed. This is nonsense; no amount of persistence will turn a “dog” into a “star”.
Perhaps this is best summed up in the following:
Persistence is an important element of success
Persistence is an essential element of failure. © La Salle 1995
The business plan is the first step to taking an idea to market. An astute entrepreneur would recognise opportunities and be willing to adjust their direction to seize these new business opportunities. It is vital when something is not working to stop and find the real opportunity!
To read the full Roger La Salle article please click here.
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