An idea only becomes a real business model when you write a business plan. Although there is no official obligation that prescribes a business plan for the foundation, it is absolutely necessary for a successful start. The business plan not only substantiates your idea, it sets the exact direction, contains extensive information about the planned company and is an important means of information to the outside world.
Whether banks, investors, business partners or the employment office, if you become self-employed out of unemployment – they all want to see a well thought-out business plan. The most important contents of the business plan are:
- Explanation of your business idea
- target audience
- Analysis of the market, competition and competition
- Sales forecast and profit forecast
- goals and strategies
- Needed finance and capital planning
- Background information about you as a founder
How to write a business plan in Kenya: Don’t underestimate it
Almost every prospective self-employed person knows that a business plan is essential for founding a company – especially if you are planning to apply for a start-up grant or want to get financiers (business angels, venture capital, …) on board. Unfortunately, many entrepreneurs do not take this point seriously enough. Writing a business plan in Kenya is more or less seen as a necessary evil. Fatal! What often comes out in the form of concepts on paper does not convince anyone. Too bad.
Be sure to keep in mind that the business plan is the calling card and backbone of your young company. Anyone who creates a professional impression can not only convince others of their idea, but also lay the foundation for a successful future.
For who is a business plan made? Who are the target? Who reads business plans in Kenya?
The effort of writing a business plan in Kenya is worth it. These are your potential readers and target groups:
- Employment office: If you become self-employed out of unemployment, you can apply for a so-called start-up subsidy from the relevant employment agency. The prerequisite for this, however, is that you can present a finished business plan.
- Investors: Most financiers – business angels or venture capitalists – make their decision dependent on an existing business plan. On this basis, the so-called due diligence is carried out – i.e. the necessary risk assessment before any company investment.
- Promotional and guarantee banks: If you want to try it first without participation, you can of course also use subsidies or a guarantee for financing (e.g. from banks). But they also always expect a sophisticated business plan.
- Business partners: A third form of financing is through partners – perhaps because you are an important and cost-reducing supplier for them. But even if you are looking for suppliers yourself and who do not necessarily want to deliver out of the blue, the business plan helps to gain trust.
Before you sit down at your desk and just start writing, please remember: Even if you show the finished plan to someone else, you are primarily writing it for yourself. The business concept forces you to sort your thoughts, analyze the market and put possible strategies into clear words, make important decisions and be clear about what exactly you want to achieve with your idea and how you want to finance it or when and where the money will come from later.
Or to put it another way: The business plan turns a fixed business idea into a concrete business concept and construct for the next five years. At least.
Why a business plan is so important in Kenya
Aspiring founders are regularly put off by writing a business plan. Admittedly, this involves a lot of effort. Good business plans usually have ten pages, but can also have 50-70 pages – depending on how comprehensive the market and competition analysis or how complex the business idea and products are.
The business plan is not only a decisive step on the way to your own company – it also fulfills several important functions: First, he helps you to formulate the idea clearly and to think about products, target groups and financing. It is essential to convince lenders, investors and business partners of the business model and get them on board. A detailed plan can reveal deficits and weaknesses in the business idea at an early stage and help to improve them. However, it can also save you from starting a business that has no chance anyway and wasting a lot of time and money.
Detailed instructions for writing a business plan in Kenya
This is how the plan is structured: The structure of a business plan in Kenya is actually not as complicated as many founders always assume. The main work lies in the preparation, research and processing of relevant data. For these reasons, experts allow around six weeks for the creation of a well-developed business plan . Depending on the size of the project, the time required can of course also increase significantly.
However, even larger plans are basically structured in the same way and always contain the following and elementary sections. It is best to follow these instructions:
1. The executive summary
It’s the heart of your entire business plan, and in many cases it’s what drives interested investors to even bother reading the rest of the pages. All important company data is summarized here on one to a maximum of three pages: the business idea, sales and profit forecasts, short portraits of the founders and their background, the description of the market, the description of the products or services and the financing requirements. This summary is at the beginning and should therefore be formulated concisely.
2. The market and competition analysis
Experience has shown that this part takes the most effort because you have to do a lot of extensive research. Above all carefully. Nothing is more embarrassing in a later elevator pitch to investors when your numbers and analyzes are wrong or you overlook important competitors. Then the whole house of cards collapses. It is therefore important that you do not embellish anything here and describe in detail how large your future market is and how it is made up (market shares!) (target groups!).
3. The corporate goals and strategy
Once you know the market, the competitors and the target group(s) in detail, you need to develop a strategy: How do you intend to gain significant market shares? In which period? With what means and employees? The decisive factor is that you focus on it and make optimal use of capital and manpower – which are usually scarce in young companies. Anyone who gets bogged down here or writes their plan too rosy will fail at first and often fail.
Include a SWOT analysis
SWOT analysis is an acronym that stands for… Strengths (S), Weaknesses (W), Opportunities (O), and Threats (risks) (T)
Compared to each other in a strategic overall plan. It serves to determine the current position of the company ( status quo ) on the one hand and to develop the strategy on the other. You can already see weaknesses or risks in the business plan, which you urgently need to counteract with suitable measures, but you also notice how you stand compared to the competition.
4. The founding and management team
Of course, there are always individual founders – but the most successful companies are founded by teams. Because here the founders can compensate for weaknesses and significantly increase seed capital and intellectual capital. Accordingly, you should work out these strengths in the business plan: Who is behind the company? What background, what experience and what know-how do the founders bring with them? Numerous investors say again and again that they invest less in good ideas and prefer to invest in good start-up teams. For good reasons.
5. The financial plan
Nothing going on without moss. Of course, every young company initially needs start-up capital and later so-called growth capital – for marketing, advertising and employees, for example. The financial plan is therefore the second important part of the business plan. It is the reference for subsequent investment and loan negotiations and should calculate at least the next three, preferably five years. The more realistic, justified and detailed the forecasts, the more convincing. It is important that you not only calculate exactly what money you need and use, but also how much money you earn in which periods and development stages. In short: How do you cover the capital requirements – and when do you make a profit (break even point)?
The most common mistakes when writing a business plan
Writing the business plan is and remains a major challenge for many founders, which is also reflected in the fact that many mistakes are made, which in the worst case can be fatal and block success. It is all the more important to identify possible mistakes in advance and to avoid them.
In the following list you will find the most common and also most serious mistakes in the business plan, which you should definitely avoid if you want to be successful as a founder and do not want to trip yourself up in the initial phase of your own company.
Errors in the information or analysis
Mistakes are human, but especially when you are writing a business plan, you should do everything you can to avoid making one here. Incorrect information or incorrect analysis can have major consequences. Maybe you completely misjudged the market potential or based your entire idea on a misinterpreted statistic. This can go so far that the entire project is in danger.
Errors in skills and competences
Who in the founding team can do what? And why is that so important? Successful founders should have the necessary skills to master the start and to lead the company successfully. Investors can also be convinced in this way – it is very annoying when the business plan does not clearly state who has which skills and who is responsible for which areas. If basic qualifications are missing, it is therefore advisable to acquire them first.
Mistakes in identifying risks
Possible risks are often concealed in the business plan in order to present only the opportunities and advantages. However, this can turn out to be a big mistake if risks are not identified in the first place for this reason. Instead of adapting and reacting accordingly, you will be caught completely off guard and have no strategy in place to resolve the situation.
Business idea mistake
The business idea in the business plan should be immediately convincing and inspiring. The best reaction is a sincere one . This is exactly what the world has been waiting for! or that really solves a big problem! On the other hand, it is a big mistake if only a tired And that should work? or worse, a critical one . That already exists, doesn’t it? is answered.
mistakes in finances
Those who make a mistake in financial planning are faced with really big problems. A bad or simply wrong calculation not only means that you will not get any investors or loans, but can also lead to insolvency. If the costs are much higher than expected and the income is far too low, after a short time you will no longer be able to cover the running costs.
How to write a business plan summary
- Turn an idea into a business model.
- Contains all relevant information about the business idea.
- Defines target audience and sales forecasts.
- Important document for investors and business partners.