Introduction
Every experienced investor understands that comprehensive financial projections for new organizations are outcomes of imagination and should be managed with a lot of care. William confirms this idea in the article ‘How to Write a Great Business Plan.’ I will provide a brief synopsis of the article. In addition to the brief synopsis, I will assess the relevance of the opinions presented in the article.
Synopsis
The article highlights that investors who intend to write effective business plans should create a framework that rationally evaluates four critical independent facto,rs. These factors are the people, the opportunity, the context, and risk and reward. The people are managers of the business plan. William says that assessing the profile of the venture’s team is highly essential because without the right team, the other factors cannot be helpful.
Therefore, a good business should incorporate the founders’ education background, place of origin, professional accomplishments, skills and experience, reputation in the industry, and level of commitment to the venture. In addition, it should include an analysis on how the team is realistic about the opportunities for success and challenges the business will encounter.
Further, it should evaluate opportunities for innovations and records of past success in the field. An effective business plan should show that the venture’s team has the experience and ability to manage the business.
Subsequently, regarding the opportunity, an effective business plan should answer two questions. First, is the market for the product or service large, promptly developing, or both? Next, is the market structurally attractive? Investors and entrepreneurs prefer large and quickly developing markets. Smart investors want to discover high- growth –potential markets early in their development.
The business plan should indicate who the customers in the new venture are, customers’ patterns of buying the product or service, the level of demand, the best price, the cost of attracting a customer, and chances of retain a customer. It should also provide information on mechanisms for reaching all identified customers, the cost of producing and delivering the product or service, and the cost of customer service.
The author also provides that opportunities exist in context. Macroeconomic factors, such as inflation and exchange rates, and government rules and regulations determine the trading environment. Context can make it hard to start new enterprises. Conversely, it can make starting new businesses simple. Occasionally, a shift in context may make an attractive business unattractive. It can also make unattractive business attractive.
A good business plan should show certain pieces of evidence associated to context. First, it should show that the management team is aware how the context either assists or hinders their specific plan. Second, it should clearly show that the team understands that the context will change and illustrate how the changes might influence the trade.
Moreover, it should spell out the management’s plan of action for solving problems in case the context grows hostile. Lastly, the plan should give details on the possible ways in which management can positively influence context.
Finally, William says risk and reward also form part of a good business plan. It shows how the business plans to manage risks. The plan should put across clearly what is expected at the end of the process. It should address how investors will ultimately get out of the business, in case it becomes successful since investors like to trade in companies that have a number of exit options.
Critical Analysis
The article provides information that can enhance business relationship between small business consultants and their clients. A small business entrepreneur can learn how to make effective business plans after reading the article. The article emphasizes that an effective business plans must have a comprehensive analysis of the profile of the venture’s team.
Business consultants can bring the information to the attention of their clients and help them to learn about their businesses. Since the level of qualification of the venture’s team determines the success of the business venture, getting the details helps the consultants to give accurate advice to their clients. Moreover, business consultants also learn for the article how to manage the opportunity, the context, and risk and reward.
The author outlines how one should research about the market, make plans that relate to the context, and manage risks. Upcoming entrepreneurs can also access the information and learn to prepare business plans on their own and save a lot of money.
Despite the advantages, the article has several weaknesses. First, it fails to provide an inclusive system for evaluating ‘the opportunity.’ It suggests that one should formulate a questionnaire and interview potential customers regarding their preferences. This method is not effective since customers’ tastes and preference change every so often. It is, therefore, difficult to determine market trends with accuracy.
Controlling the context is equally difficult. Small business enterprises have no resources to influence factors as the policy-making process and inflation. This shows that the article does not provide a perfect solution.
Business consultants and entrepreneurs should be highly innovative. Entrepreneurship involves risk-taking since information on how to overcome certain challenges are not available in books and articles. William fails to provide an ideal solution relating to, for example, how to assess “the opportunity.” However, it offers useful insight into numerous aspects regarding effective business management.
In the article ‘How to Write a Great Business Plan,’ William outlines the people, the opportunity, the context, and risk and reward as the factors that determine the effectiveness of a business plan. Entrepreneurs should ensure they employ qualified and experienced managers. Also, they should invest in markets that are highly promising and put in place realistic mechanisms for managing risks.