PLAN VALUATION 1

PLAN VALUATION

Many entrepreneurs start out with grandiose ideas about what they would like to do with their business. Seven to eight months down the line, the fire is out. You need to pull, prod, and prick before you can really get a hang of what they are about. It has been said a million times, ‘A good business idea is not enough to make a good or profitable business’. You need much more.

You need to be able to transform the idea into a saleable product that is unique enough to ensure you are not driven out of the market by copycats. There are a million things you need to do between the idea and business success stage that we do not have enough space to list, but I think in a nutshell I’d say ‘You need to put pen to paper.’ This is called planning. You need a Business Plan which could comprise of so many other sub-plans (if I can use such a word) like marketing plan, sales plan, operational efficiency plans, brand management plan, customer service plan … The list of plans is endless, but we need to realize the plans are not ends in themselves but tools to help you get to your destination – a profitable and enduring enterprise. The true worth of a plan is not the beauty of the prose or presentation, but the quality of decision it engenders.

I asked participants at a training recently organized for aspiring entrepreneurs why the felt they were ‘bankable’ or worthy investment. A common response was that they had good plans on ground. Though this is ‘nice to have’, I told them investors do not place their money on good plans, but on good plans sponsored or prepared by good people who have the ability or potential of transforming this plans into good and profitable businesses. In order words, your plans should adequately consider the financial implications of the intended activities. How much it will cost, how much it will generate, and what you need to do to ensure you can deliver on the promise.

In my work as a Businesses Development Professional, It is important that I believe in the companies and the ability of the initiator to succeed in that line. But my faith in the dreams is constantly challenged by the fact that many times, they seem blissfully unaware of the financial angle of the business. My major point today is that if you hope to attract investors, get a loan or even perform efficiently and turn a profit, your plans cannot be all flowery words and superfluous promises. It must be backed by financial facts based on sound statistics and logic. Anything short of this is just an exercise in busyness a waste of your time. More on this next week.