Order from Chaos; Why Business Plans Accelerate Success

Many times entrepreneurs find themselves at the edge of chaos due to the lack of a bit of initial order. Often on my walk across this earth, it becomes evident to me that there is a mystical interrelatedness of the universe and the world. The cross-cutting application of principles and the blending of rules like physics and others like life. Case in point can be the fact that once an object once in motion halts or stops, physics states that another force will have to act on it for it to get into motion again, one of Newton’s famous laws of motion. An example of this can be seen when you are riding a bicycle, when in motion it’s easier to turn the pedals, however when you stop, it requires much greater energy to make it move again, you can’t just stop and expect that it won’t take more energy to get moving again. 

The interrelatedness I speak of comes up when I relate this law to life and in the case of this article, business, when an unexpected hitch rears its head it can bring the business to a halt and to make that business go back to what it was it will take much greater manpower than was being used before.

As humans, we naturally tend to live in the present and unfortunately are terrible when it comes to responding to signs of impending disaster (ergo procrastination), that is why many problems we tend to encounter could have been solved with small but sure steps while the disaster was far off. It is naturally not that easy to foresee weak links in business unless a bit of foresight is employed. 

Another scientific term I would wish to allude to can be the butterfly effect in chaos theory, this alludes that a small change at one place in a complex system can result in large effects elsewhere, and this is why some noted meteorologists say that just the flaps of a butterfly’s wings can have a part in a hurricane elsewhere. This is the same principle I wish to propound concerning the intending entrepreneurs that enter business by giving thought to a business plan. It’s possible that a small miss-step somewhere in the economic machine can pull the business to a halt, this is why I propose that without an initial business plan it is not as easy for the entrepreneur to understand the forces that affect your business’ growth and success.

This article will be divided into three parts, first briefly describing a standard business plan, secondly delving into some of the problems unplanned businesses tend to come across and third how the revelation that is the business plan can help many of these businesses and start-up entrepreneurs

A standard business plan 

A business plan is in the most basic form a document that sets out the business’ future goals and objectives and lays out the strategies for achieving them. A business plan is not a one-trick pony, it can be made for other people not part of the business like lawyers, bankers, investors, etc, but you can also make it for yourself, this would be a lean business plan. As Abrams Rhonda writes in her book the successful business plan, “it takes more than just a good idea and a bright young mind, you also need a business plan. The plan shows that the business has been rigorously assessed and that the entrepreneur has carefully thought through the issues for steps necessary to take the idea and fashion it into a successful company.” Pessimism is a useful factor in making a business plan because it enables the person making it to foresee as many worst-case scenarios as he or she can and addressing them in the plan.

A business plan covers many aspects before being sub-divided to cover other areas. These include; the executive summary, the company description, industry analysis, target market, the competition the business will face, the Marketing plan and sales strategy, the operations that the company will undertake, the management and organisation of the company, the long term development and exit plan, the company’s financials and the plan’s appendix.

Problems of Unplanned Businesses

There may be entrepreneurs that might be successful without planning and only using emotion and gut instinct as a guide, but, I’m more sure than not that they have experienced more trial and error than others with a business plan who are aware of the dimensions that they are working under. Many sites speak to the causes of business failure however I can note that the two most common was a lack of sufficient working capital and a lack of experience.

Working capital is very important because in business it is what enables you to make day to day purchases of resources needed for sustaining it. It’s calculated by subtracting current liabilities from the current assets. Working capital is also a big factor in getting more funding e.g. from banks, investors, etc.

A lack of experience categorises you as an individual new to the industry and market. It’s then more probable that many mistakes will be made, and some can be fatal e.g. Bad accounting, lack of good managerial choices. There is also a problem of bad debt.

The Revelation 

Starting a business is a worthy venture that comes with ninety-nine problems but a business plan isn’t one of them, a business plan enables you to make crucial business decisions that focus your activities and maximize your resources, you get to understand the financial aspects of your business including cash flow and break-even requirements, enables you to gather crucial industry and marketing information, with a business plan it’s easier to foresee/anticipate and avoid obstacles the business is likely to encounter like shortage of working capital. For already existing companies it enables you to expand in new and increasingly profitable directions and finally, in the event of seeking more funding sources e.g. from relatives, banks, or investors, a business plan allows you to be more persuasive to funding sources.

Time tends to be an issue that arises when it comes to making business plans that is why many business consultants come in for a fee to help in reducing the load. Please note that I wouldn’t recommend putting all the work on the consultant because even if he or she is capable of doing it, the plan must be painted in the eyes and vision of the business owner. What use is it going up a mountain if you want to be carried to the peak, the view will not be as rewarding and you will not have formed your unique path, so get the consultant but do not depend on him or her. A good consultant is one who will be able to offer guidance and direction on the more complex parts of the plan like accounting, marketing, and profitability strategy among others.

All in all, a good business plan must be seriously considered in a business idea especially in addressing the long term forces that can affect your business, it must be a plan that stands up to the most exacting scrutiny and toughest standards. As Hal Shelton (the secrets to a successful business plan) says, a business plan becomes a road map to the successful implementation of a business idea. It may take time to get together all the information necessary for a rigorous business plan but in the end, it will be worth it.

1 COMMENT

  1. Thanks a lot. This article was very insightful. It came at the time when I was just done drafting one, thought still skeptical if it’s worth awhile.

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