The Importance of a Business Plan in South Africa

It is very important to have a good business plan in South Africa, because the markets are not as clear-cut as they are in advanced markets in Europe. A South African Start-Up requires more planning just to acquire the capital, because there is need to ensure that the business is executable, measurable, and most importantly, profitable.

 In South Africa, a business plan is a document that answers all the questions on what is the business trying to achieve. The business plan outlines how you will achieve your goals and achieves objectives, as well as specific measurement methods for performance indicators. It is very important that as a business starts, it has all things required for measuring performance, because performance unmeasured will not result in profitability. 

The Business Plan is there to outline how the organization can positively impact society or customer and that is all about measuring performance, and creating standards based on the performance.

A good company gives great value for its shareholders through positive return on investment; it must have good management that produces high quality products and services; and must be run efficiently with an appropriate technological infrastructure. The business should produce excellent returns in which there are high profits.

Profitability, however, does not happen overnight for a good business, and it is up to the founder of that business to make investors see the profitability journey. This is done by not just giving financial estimates or projections of the first year, and up to about five to ten years, but it is also done by giving an intelligent and informed business narrative of the operations, environment, and various profiling. 

A good business plan gives narratives of how the journey from lack of working capital, to growth by use of injected working capital, and even how the business will grow and sustain itself after profitability begins. 

Post break-even is very important for investors, as they want to see and know, what you will do with the profits that you get after the business starts growing. For investors to invest in a business, they need to see it has other businesses that are run, because without the business model in which the business will be run or operate, there is no way an investor can invest in that company.

There are various business models used in today’s world, and choosing the most common in South Africa will help the business owner acquire relevant investors. Investors use simple to understand, and most relevant business models because they are easier to measure, and can be measured against the performance of other businesses in the same industry. It is very important to make sure that the business model in use is one that can be measured against other companies that either directly or indirectly compete with your business.

One of the most important things investors need from a business owner is a business plan, because it gives them information on how well prepared a company is to start operating, and if it will run into any problems. The reason why most investors require the use of a business plan for every investment opportunity presented by various companies is because it gives the information on how well prepared and organized a company is that needs funding or wants to start running its operations.

Opportunities Assessments are very important when starting a business. The reason for it is that if one’s business concept does not do well in a particular market, it will be good to know so that the business owner can cancel the business plan and start another. 

It is very important to assess if another market has better chances of being profitable and successful, as it will help the business owner avoid spending time and money on a business model with no potential of becoming a profitable or successful business. The opportunity assessment forms part of the Business Plan, which all investors require as part of their due diligence before committing their funds.

A Business Plan is not just a document to get money from investors; it is a template and instructions manual that shall be followed as the business starts or changes direction or speed. A Business Plan is very important in a modern South African economy, and Africa. It guides the business owner as to how the business is to be run and whether it will be a success or not.

An opportunity assessment is one of many tools that can be used when presenting a business plan. The idea behind an opportunity assessment is that if there are problems in any previous investment opportunities presented by the company, they shall be addressed and sorted out before committing funds to it.

Source: Gov.SA, World Bank

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