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Starting a new business in the New Year means planning

Starting a new business in the New Year means planning
16-01-24 / Shelly Nxumalo

Starting a new business in the New Year means planning

Johannesburg - 2024 may feel like the right time for aspiring business owners to take the plunge to start-up a business and become their own boss. It is, however, important to note that entrepreneurs often mistakenly believe that passion and a basic understanding of finance is all that is required to make a new business succeed.

Most successful business owners would advise aspiring new business owners that placing an emphasis on business plans is an invaluable planning tool that can help businesses (at all phases, and of all sizes) to succeed.

Oscar Siziba, Head: Coverage for Business Banking South Africa at Standard Bank, says regardless of the size and nature of your business, a business plan forces a person to consider all aspects of their business.

“A business plan is more than just a tool for raising finance or a document developed to get you thinking about your business. Even though it is quite common for business plans to be outsourced to professionals, to meet the formal requirements of a lending institution, the onus is on the business owner to ensure that the plan reflects their future goals.”

“The business owner who sits down with blank sheets of paper, or a business plan template, and follows a disciplined planning process is taking a major step towards ensuring the future success of their business aspirations,” says Siziba.

“More importantly, a business plan also contains a future view that predicts where the business will go, and what milestones should be achieved within the first five years of operation. It is a map to navigate the long business road ahead.”

Siziba says that a thought-through and well-written business plan should always cover the following elements:

  • Description of the business, industry, products, and the target market.
  • Research to identify markets, competitors, size of market, location, and product distribution.
  • Unique selling proposition – what will make the business unique and competitive?
  • How products are priced, and what profit margins should be.
  • Overall financial position covering sales, expected profit forecasts, cash flow, and expected return on investment.
  • Financial requirements which set out the capital needed to start the business and requirements for future expansion.
  • Marketing and how customers will be informed about products.
  • Milestones – the projected market share at certain periods of the company’s growth, what is essential to grow the business and when it is anticipated that additional investment could be required.
  • All relevant information around an e-commerce element or focus of the business.

Siziba says that a thoroughly developed document like this presents these advantages:  

  1. A base plan that provides a set strategic direction which can be tested against reality.
  • It is easier to review your progress when you have a business plan. The plan will also quickly show you where your initial business assumptions were wrong. This makes it easier to adapt the business strategy and set new milestones.
  1. Help keep the focus on the core business.
  • A strong business plan helps you to avoid the temptation of moving away from core, profitable activities and making short–term decisions that could have a negative impact on cash flow and profitability.
  1. Plan correctly for expanding the business.
  • Using the plan to identify where, and when, expansion should take place and whether these are still applicable to the market.
  1. Identifying changes in the market.
  • A business plan helps you to identify areas that need attention, and possible changes in customerbehaviour. This information will enable you to change marketing and advertising efforts and help you to avoid wasting money.
  1. Open new avenues for business.
  • If your market has changed, you may find opportunities for expanding your business. For example, having a bricks and mortar business moving online.

A business plan is never a waste of time. The document will not only help a bank to evaluate your creditworthiness and attract potential investors, but it will also be a valuable working document that can be adapted accordingly to track your business accomplishments.

To download a business plan template visit:

https://www.standardbank.co.za/southafrica/business/bizconnect/help-me-start-my-businessThis site can also be accessed for more information and resources around various aspects of starting, managing or growing a business.

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