WHY BUSINESS PLANS AND PLANNING?

Abstract: The writing of a business plan has become increasingly more highlighted in the academic world during the last few years as courses are being taught on the subject and a number of competitions have been started. Lund Institute of Technology co-organises an annual business plan competition called Venture Cup in order to encourage students and other participants to get into entrepreneurship.
People arguing in favour of writing a business plan often mention the possibility to test the idea theoretically before going live as a big advantage. The business plan offers a framework to perform the necessary studies in order to find out if the idea has the potential of becoming a success.
A common argument against writing a business plan is that if the entrepreneurs are not looking to attract any funding, they find the writing process to be a waste of time as they will not show the plan to any outsiders.
The author’s interest in writing business plans arose during a course at Lund Institute of Technology called Entrepreneurship and Business Development. He found it very interesting to combine the engineering aspects of his education with the business skills required for the planning of a business. The author wanted to learn more about the process of developing an idea and turning it into a successful business and it is his belief that a business plan is the best tool for success in this case.
The business idea described in this thesis is a juicebar. Once the business idea had been chosen, the author started to conduct background research. The primary data is mainly based on interviews with advisors at banks,governmental support organisations, unions, commercial consultants and sales representatives of various suppliers. Information has also been gathered from a market survey conducted among potential customers.
The juicebar described is intended to offer its customers fresh fruit drinks, served in an environment which gives an healthy impression. The bar should be an alternative to smoky cafés and stressful snack-bars. The bar should be opened in the centre of Leuven, Belgium, where it is close to shoppers, students and tourists who pass by on a daily basis. The products are primarily aimed at young working people and students who are interested in living a healthy life.
The market analysis and other research show that there are certain risks with this business idea. The main risk lies within attracting customers. Further market survey will be required before the plans can become reality, but the author is sure of the idea’s opportunities. It is the intention of the author to prepare against these risks by gathering information and advice from more experienced entrepreneurs, who he will meet through a sponsor programme.
The lessons learned from writing the business plan are that planning the business is essential and that the writing of the business plan itself will force the entrepreneur to think about things that he otherwise would not have thought about on beforehand. A well-written business plan can turn into a very detailed blueprint for how to construct the business and it will be a roadmap to follow when the business is up and running.