Who Needs a Business Plan?!

Over a number of years people I know in Nigeria have consulted with me on business start ups. Very often they have found a venture they like or are good at and noticed that it appears to be a profitable trend. Proposals have included farming, shopping malls, business consultancies, wedding planning, event management and transportation. All very marketable ideas. However, each time I have mentioned putting together a business plan a lot of people have hesitated. One person remarked that business plans don't work in Nigeria; you just go for it and try to make the best of it. Needless to say quite a few of these ventures have gone down the pan. 

Typically in Nigeria people have raised money for business by borrowing from family and friends, or getting a loan through a friend who is a bank manager. People have been known to take out car loans and use the money for business. Nowadays, banks are stricter with lending, and micro finance institutions require very detailed business planning. So the benefits of having a business plan aren't just to show you can make a profit. Whether it's a bank or a friend investors want to understand what your marketing strategy is, how much your set up and operational costs are, what your profit projections are  and how the business will be run for the first five years. Of course, this might not be applicable if your proposal is to secure a government contract and abandon it midway after pocketing the money!

Having a business plan is more than just having a document to wave around. It's a sign that you have subjected your idea to a thorough cost-benefit analysis and you have identified the milestones you need to reach to ensure success. It also gives your investors an assurance that you will be accountable and mindful of the risks to be managed. It takes some effort to prepare a business plan but it is well worth it both in raising finance and managing the business.