Whether you are running a business or thinking to start one online or offline, it is almost certain to fail if it has no planning. No matter how big or small, every business needs a plan. It makes you think before you act. It compels you to establish groundwork for your business.
Business plan prompts you to think about competition and evolve strategy to beat them. It guides you in deciding worthiness of your business idea.
With the help of business plan you can estimate expected costs, revenues and profitability of your business.
Online business planning is not different from offline business planning. Both need a plan! But many first time online business entrepreneurs, in their over enthusiasm, overlook concept of business planning and meet with failures.
Described below are 6 fundamental principles that must be used in business planning as an insurance against failure.
1. Objective Principle:
A business plan must incorporate clearly defined objectives which the business must accomplish. Business plan is fundamental to any strategic planning process. It should therefore have well defined objectives.
2. Requirement Principle:
A business plan should fulfil requirements of bodies providing funds. When you apply for funding, you are required to comply with compliance act, which itself makes your business plan more rigorous. Some of the requirements of funding bodies include strong commercial potential, technological innovation capability and potential to avert technical risks.
3. Background Principle:
A business plan must be evolved by the people with relevant background, namely the founder of the new business. It should comply with author’s background and preferably be drawn by the person or the team that is supposed to run the business. For a start-up business, planning process educates the owner in how to run the business. By delegating this responsibility to others, the owner will neither be able to understand nor implement the plan successfully.
4. Motivation Principle:
There needs to be clear motivation behind a business plan that highlights its importance. It becomes the reason for accomplishment of plan. This reason reminds the owner and the team why plan is important.
5. Detail Principle:
A business plan must be prepared with sufficient details and should also be flexible to accommodate changing requirements. This inspires confidence in executing business. A detailed plan conveys the message that it has been prepared with thorough research and deep thinking.
6. Cash Balance Principle:
A business plan should always incorporate positive cash balance. Failure to get it realistically positive is a pointer that your business idea is not worth pursuing. The plan must always underestimate revenues and overestimate expenses since a business is more often fraught with uncertainties.
7. Rigour Principle:
A business plan should be rigorous, reliable and complete in all respects. It must address all issues sequentially and deal with at the right time. It must not be rushed.
Principles described above are very important for the success of a business. If a business fails, it is very likely that you ignored one or more of these principles.
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