Yaneek Page | The tricky business of writing business plans
QUESTION: I am finally taking the step to ask you for advice. I notice everyone starting up businesses now and have the need for business plans. I also notice that just since the other day banks are saying they will do more for small business to try to finance them. My thought right now is that the time is ripe to launch a business plan writing company especially because the banks want to lend more to the business sectors now. Basic supply and demand stars are aligned. I have a degree in business administration with a minor in human resources management but have been working at a call centre for the last 2.5 years and it is totally overdue that I put my degree to use. My question is, do you think this is a good business for me to open in Jamaica now?
BUSINESSWISE: I’m not sure business plan writing, by itself, can be a viable business in Jamaica now. I have several reservations about the viability of your idea as a stand-alone company which I will outline in detail, shortly.
However, let me emphasise that the only way you can reasonably evaluate how successful this business may be for you is not by reviewing my opinion alone, but actually taking the time to go through the business planning process and writing your own comprehensive plan. That’s the next step I would recommend in determining whether this is a business you should be starting in Jamaica now.
As you prepare to undertake this process, here are a few things to consider.
- On average over 10,000 business names and businesses are registered with the Companies Office of Jamaica, COJ, each year.
- Getting data from the COJ on business registration – business names, companies and partnerships – over the past five to seven years should be helpful in your trend analysis and give some important perspective into the preferred industries for entrepreneurs.
- It is estimated that the majority of enterprises operating in the country are not currently registered and that many business operators have no interest in formalising their operations.
- While the Global Entrepreneurship Monitor, GEM, reports for Jamaica indicate a positive view of entrepreneurship and high prevalence of start-ups, the majority of people who start business don’t regard business plans and formal training that will enable them to execute properly as priorities.
- Several sector reports and data from the Ministry of Industry, Commerce Agriculture & Fisheries over the years have revealed a propensity for Jamaicans to undervalue strategic planning, particularly business planning when starting and operating business.
- Many lending institutions that support small businesses have departments dedicated to supporting business plans and offer free templates, advice and even some training in how to prepare business plans.
- The Government of Jamaica has several subsidised programmes for the preparation of business plans and/or organisations engaged in business plan writing at minimal cost. This has implications for pricing your service, service delivery, and so on.
- Start-up businesses, which would likely be the largest segment of your target market, are not the most attractive customers, an issue I delved into in a previous column titled ‘Why Start-Up Businesses Are Unattractive’.
In Jamaica, business plan writing is typically offered as just one of the services in a suite of professional services and products for business customers. It is rarely a stand-alone service. Several accounting firms and business support service entities currently offer this service, so take the time to do your research about how much they charge, what they deliver, strengths and weaknesses of these providers, and so on.
One of the main reasons business plan writing has not been attractive as a business is that the actual preparation of even the most basic plan is costly, and not enough people value or are willing to pay a premium for the service.
Remember, it takes highly skilled and experienced personnel to write proper plans, assuming you want to deliver a quality product. It is not only labour-intensive but very time-consuming and specialised to each customer. This spells a business that’s hard to scale while returns minimal profit.
Additionally, competition from entities that provide low-cost, state subsidised services is exceptionally challenging to manage when the target market barely understands, values or can afford the input required to develop a sound plan – which should include credible financial projections, market research and data, and risk analysis, among others.
Another critical issue is that the business model fundamentals aren’t sound. That is, the cost to acquire a customer is high, the lifetime value of customers is limited and the risk of reputational damage is high because many plans fail to attract funding from unwilling lenders, which is the main purpose business plans are sought in our context.
By now you would realise there’s much for you to consider, and unfortunately it’s not highly positive. However, as I outlined at the start, my opinion is not the ‘end all’ in assessing your idea. Instead it will come down to your own business plan, so now is the best time to put your skills to use. Good luck!
- Yaneek Page is the programme lead for Market Entry USA, a certified trainer in entrepreneurship, and creator and executive producer of The Innovators and Let’s Make Peace TV series. email@example.com