Solve Funding Issues to Finance SME’s Growth Plans

SME’s are developing rapidly and flourishing enormously worldwide. Since its initiation and establishment, there some extremely important and basic requirements to be met and adopted. These requirements include; infrastructure and employment requirements, a developed information technology infrastructure along with funding sources, which is the most important aspect of the sustainability of these SME’s.

Funding sources are the strengthening pillars for such small and medium-sized enterprises.

SME (small to medium enterprise) is a convenient term for categorizing businesses and other organizations that are somewhere between “small office-home office” (SOHO) size and the larger enterprise.

Unavailability of timely and adequate funds has an immense adverse effect on the growth of these SME’s which in turn affects the growth of the Indian economy. Such insufficient funding sources serve as the crucial barrier in the development and sustenance of SME’s.

The economic development in India is hugely dependent on the performance of small or micro and medium enterprises. They are the powerhouse of innovation, entrepreneurial spirit and enormous talent, which is required for the nation’s development in the economic sector.

Indian SME sector:

This sector contributes to the industrial output, provides employment to masses. They also contribute widely in exports. These organizations produce quality products for national and international markets.

The presence of SME’s is greatly acknowledged. The manufacturing sector is rapidly advancing because of the contribution of these organizations.

Undoubtedly, these SME’s are performing their best, despite their limited sources. Still, there are multiple cases of these organizations facing funding issues.

The solution for funding issues faced by SME’s:

The government has been taking initiatives like setting up the National Manufacturing Competitiveness Council, announcing National Manufacturing Policy (NMP) and much more to energize and boost the manufacturing sector.

Banks have made stable strides to support SME’s. However, such approaches by banks for funding are limited and restricted because by controlling and managing risk, they ultimately create value. Thus, banks are not always a rightful solution as a funding source.Access to capital markets is rare, in the case of SME’s. Therefore, such organizations hugely depend on borrowed funds from some financial institutions and banks.

Mostly commercial banks provide extended working capital and financial institutions provide investment credits. Universal banking services, working capital, and term loans are becoming available for SME’s for funding.Meanwhile, the traditional requirements of finance are still actively in use, for creating the asset and working capital.Globalization is generating a demand for introduction and development new financial and support services.

The RBI should issue necessary guidelines to all banks on credit flow. Moreover, the Government should work rigorously to create an environment conducive for growth for the SMEs that restrains the need for capital and debt.

Setting up SME-targeted banks that provide priority to lending to the SME sector.

Financing schemes for SMEs can be formulated and be beneficial. These might be highly risky, but promises great returns. There is also a need for a reduction in the interest rates. SMEs has been paying high-interest rates for bank loans. The loan structure should restructure, on an urgent basis as lower interest rates are an extremely important need for SME’s.

Delayed payments are yet another major area of concern for SME’s that lead to reduced working capital.

Recycling of funds and various business operations are majorly affected due to delay in dues settlement. Defaulting customers are mostly large enterprises and the SMEs due to fear of losing business are not able to report against them.

An automated portal could be established by the government, wherein SMEs makes available their customer detailings.The government can also send automated reminders to defaulting organizations, in the cases of payment defaults.

As it is well known all over that, for the government, the Budget is an occasion to set up new financial goals and economic goals, allocate financial resources and provide policy directions. During Budget presentations, the Finance Minister announces new policies, schemes, projects and allocates finance for the development of several sectors of the economy, to meet the overall goals of socioeconomic growth.

For SMEs, the potential sources of finance are very limited. However, their usefulness is limited because of mostly practical problems. Crowdfunding also supplies chain financing are some funding sources.

Some more funding sources for SME’s

The owner, family, and friends of SME

An excellent source of finance. Mostly, such investors, invest not just for financial gains and are willing to accept lower returns than other investors. However, the key limitation, for most of these organizations, is that, that the finance they can build personally, from friends and family, is limited.

Trade credit

SMEs can take credit from their respective suppliers. It is however just short-term and, if the suppliers are big companies who have identified and categorized them as potentially risky SME, the possibility to extend may be limited, for the credit period.

The business angel

A wealthy individual who is willing to take the risk of investing in SMEs. However, they are just found in rarity. Once such an individual is interested they can become useful to the SME, as they have great business plans and contacts.

Factoring and invoice discounting

These sources help the organizations to raise finance. It is only short-term and is mostly more costly than an overdraft. However, with the SME growth rate, their receivables will grow thereby the amount they can borrow from invoice discounting will also rapidly growing.

Leasing

Leasing assets is a better option rather than buying.them, as it avoids to raise the capital cost. However, leasing is mostly possible on tangible assets.

Listing

An SME can become quoted by acquiring a listing on the stock exchange. Thus, raising finance would become less of an issue. But before listing can be considered the organization must grow to the considerable size that a listing is feasible.

Supply chain financing

SCF is new and is somehow different than the methods of traditional working capital financing, such as offering settlement discounts, as it promotes collaboration between the buyers and sellers in the supply chain.

The venture capitalist

A venture capitalist organization is mostly a subsidiary of a company that has worthy cash holdings and might need to be invested. Such subsidiaries are at high-risk, potentially high-return part of their investment portfolio. To attract venture capital funding, such organization has to have a business strategy and idea, that may help to create, high returns that the venture capitalist is seeking. Thus, operating in regular business, venture capitalist financing may be impossible for many SME’s.

The above mentioned are the various solutions for SME’s to deal with the issue insufficient funding sources.

The Lost Costs With Administrative-Related Tasks With Group Health Plans

Health coverage is expensive- both for individuals and for companies that provide it.

The costs affect much of the medical field, including drug prices, cost of coverage,

costs of care and visits, and a myriad of other areas of the health industry. Part of

those costs is resulting from the administrative handling of health insurance logistics,

and those costs affect the rest of the field, too.

According to studies in the field, noted by the CAQH Index, in 2019 they noted that

“SPENDING ON HEALTHCARE ADMINISTRATION COSTS AN ESTIMATED

$350 BILLION ANNUALLY IN THE UNITED STATES DUE TO IT’S

COMPLEXITY.”

Data from the 2019 CAQH Index indicates that $40.6 billion or 12 percent of the

$350 billion spent on administrative complexity, is associated with conducting

administrative transactions tracked by the CAQH Index. Of the $40.6 billion spent on

these transactions, $13.3 billion or 33 percent of existing annual spending on

administrative transactions could be saved by completing the transition from manual

and partially electronic processing to fully electronic processing. The progress that

the industry has already made to automate these administrative transactions has

saved the industry over $102 billion annually.”

Administration is, of course, an important aspect of any industry, especially one as

complex as medical and related fields. The difficulty with modern health insurance

means extensive administrative hours as they tend to a myriad of issues on multiple

fronts. This means, as noted earlier, a great deal of expense that filters throughout

the medical field.

Unfortunately, small business owners tend to bear the brunt of these costs, at least

when it comes to businesses rather than people. As noted here,

“NOT SURPRISINGLY, THE COST OF PROVIDING HEALTH COVERAGE TO

EMPLOYEES LOOMS LARGER THE SMALLER THE BUSINESS,

BUT THIS ISSUE PLAGES BUSINESSES REGARDLESS OF SIZE”

The price tag on health insurance is a significant pain point for small employers. The

problem extends to recruiting and retaining talent, as well. To compete with larger

employers, small employers are hard-pressed to offer benefits like health insurance,

even as the benefit takes up a larger share of the bottom line. Two-thirds of

businesses (69%) said the problem has been getting worse. They reported that costs

have increased over the last four years; one-third of this group reported annual

increases of 10 percent or more. Businesses with fewer employees cited bigger

increases than larger businesses. Employers cited prescription drugs and lack of

choice of health care plans as pain points.

There are ways to curb this expense without impacting the medical field or health

insurance. One method is the increased use of digital materials. According to the

previously cited Index, “Although partially electronic transactions often cost less and

are less time consuming than manual transactions, there are savings opportunities

associated with moving from partially electronic web portals to fully electronic

transactions. For the medical industry, $2.7 billion of the $9.9 billion total savings

opportunity could be achieved by switching from partially electronic transactions to

fully electronic transactions. The greatest per transaction savings opportunity for

medical providers is a prior authorization. Medical providers could save $2.11 per prior authorization transaction by using the federally mandated electronic standard rather than a web portal. Understanding the impact of portal use in more detail is important as the industry focuses on opportunities to decrease administrative costs and burden.”

The medical field is one area where increased use of digital technology has lagged in

comparison to other fields. Concerns over confidentiality and security, combined with

outdated legislation, mean much in the medical field is handled with pen and paper.

That said, the COVID-19 pandemic has resulted in rapid inroads in digitization. Still,

administrative costs remain high, with subsequent effects throughout healthcare.

Along with the use of digital technology, another way to reduce costs is through increased automation. As noted by the previous study, “The 2019 CAQH Index estimates that the medical industry has avoided over $96 billion in annual administrative costs through efforts to automate administrative transactions. By comparison, the dental industry has avoided over $6 billion annually. For both industries, the largest annual savings has been achieved for eligibility and benefit verification at $68.8 billion for the medical industry and $3 billion for the dental industry. However, although the industry has already avoided significant administrative costs through automation, 33 percent of existing spending could be saved through further automation.

To continue to drive progress, harmonization is needed across all stakeholders to

reduce administrative costs and burdens. Aligning on a common understanding of the

barriers to electronic adoption and the business needs of the future is imperative for

plans, providers, vendors, standards development organizations, operating rule

authoring entities and government to maintain and improve upon industry

achievements to date.”

There are other ways to mitigate costs as well, without subsequent suffering in quality. One way is to reduce what one article sites as administrative waste. As noted by said

article,

“ADMINISTRATIVE WASTE AS ANY ADMINISTRATIVE SPENDING THAT

EXCEEDS THAT NECESSARY TO ACHIEVE THE OVERALL

GOALS OF THE ORGANIZATION OR THE SYSTEM AS A WHOLE.”

The National Academy of Medicine’s seminal 2010 work, The Healthcare Imperative:

Lowering Costs and Improving Outcomes, identified unnecessary administrative costs

as one of six key areas that need to be addressed to bring greater value and lower

costs to healthcare consumers.

ADMINISTRATIVE COSTS HAVE BEEN ESTIMATED TO REPRESENT 25-31%

OF TOTAL HEALTHCARE EXPENDITURES IN THE UNITED STATES,

a proportion twice that found in Canada and significantly greater than in all other

Organization for Economic Cooperation and Development member nations for which

such costs have been studied. Moreover, the rate of growth in administrative costs in

the U.S. has outpaced that of overall healthcare expenditures and is projected to

continue to increase without reforms to reduce administrative complexity.

It is thus important to differentiate administrative waste from necessary

administrative spending. As noted by the previously cited article, “A key segment of

wasteful administrative spending is found in the significant amount of paperwork

needed in our multi-payer healthcare financing system. Having myriad payers, each

with different payment and certification rules increases the complexity and

duplication of tasks related to billing and reimbursement activities. Hence,

“THE TOTAL BIR COMPONENT OF ADMINISTRATIVE SPENDING-

REPRESENTING ABOUT 18 PERCENT OF TOTAL HEALTHCARE

EXPENDITURES-IS OFTEN SINGLED OUT AS WASTEFUL AND A

POTENTIAL SOURCE OF SAVINGS. AN OFTEN-CITED STATISTIC IS THAT

HOSPITALS GENERALLY HAVE MORE BILLING SPECIALISTS THAN BEDS.”

A problem with separating administrative waste from proper administrative costs is

insufficient data. While healthcare provides, creates, and utilizes fast amounts of

data, that information is geared to specific fields and areas. As a result,

administrative data tends to be neglected and understudied. As this article notes,

“Our current understanding of administrative spending relies on a patchwork of

mostly aging analyses, leaving policymakers very much in the dark when it comes to

addressing this growing category of healthcare spending.

MOREOVER, PATIENT ADMINISTRATIVE BURDENS HAVE NEVER BEEN

TALLIED, REPRESENTING THE GREATEST GAP IN OUR UNDERSTANDING

OF ADMINISTRATIVE BURDEN. PATIENTS INCUR ADMINISTRATIVE COSTS

WHEN THEY ENROLL IN COVERAGE, RECEIVE CARE, AND GET

REIMBURSED FOR EXPENSES. PATIENTS WITH PARTICULARLY COMPLEX

NEEDS MAY EVEN RESORT TO HIRING A PATIENT- OR MEDICAL-BILLING

ADVOCATE OR AN ATTORNEY.

Other data gaps include research to identify potential administrative waste associated

with provider credentialing, pre-authorization or grievances and appeals.”

Though more data may be needed in regards to understanding administrative waste,

there are still methods to handle it and ensure expenditures on administration in

healthcare are spent properly. This will help reduce overall healthcare costs,

including health insurance. One of the costliest areas of administrative costs is

billing. This issue has been known for some time. As noted here, “In 2010, the ACA

tried to rein in administrative waste. In recognition of the high cost of billing and

payments, section 1104 of the ACA required the US Department of Health and human services to promulgate rules to standardize many aspects of billing and payments. Specifically, the ACA called for a national system to determine benefits eligibility, coverage information, patient cost-sharing to improve collections at the time of care, real-time claim status updates, auto adjudication standards, and real-time and

automated approval for referrals and prior authorizations. These actions were

supposed to be implemented in 3 waves in 2013, 2014, and 2016. However, only the

first 2 waves were implemented in 2013 and 2014. These regulations standardized

eligibility required real-time claims status, and created electronic fund transfer

standards.

THE MOST COST-SAVING ACTIONS, AUTO ADJUDICATION OF CLAIMS

AND PRIOR AUTHORIZATIONS, WERE SUPPOSED TO BE

IMPLEMENTED IN 2016 BUT WERE NEVER ENACTED.”

The matter is complicated by how to diffuse healthcare is within the United States.

There are federal administrations, state administrations, regional groups, corporate

groups, church groups, local clinics, and clinics operated by chains, such as CVS

Minute Clinics. The previously cited article makes note of this, stating that

“BECAUSE THE US HEALTHCARE SYSTEM IS SO FRAGMENTED, THERE

IS NOT A CLEARLY DOMINANT ENTITY TO SET ADMINISTRATIVE

STANDARDS AND FORCE ADOPTION.

The federal government is the largest payer, but its market power is not concentrated

because its payments flow through hundreds of different programs, including 50

unique Medicaid programs, Medicare, hundreds of Medicare Advantage plans, ACA

insurance exchanges, federal employee health benefits, the military health system,

Veterans Affairs, and the Indian Health Service.Each of these programs has governance over its administrative rules. Some programs, such as Covered California, use their local market power to force standardization of administrative elements, such as benefit design. The private sector alternatives lack either geographic reach or local market scale. The largest private sector entities are

the payers United Healthcare and Anthem. However, neither of these companies are

positioned to be administrative standard setters. United Healthcare lacks a local

market scale because it usually only accounts for 10% to 20% of patients for

clinicians. Anthem lacks geographic scale because it only operates in 23 states. Only

the Medicare system operates in all states and is accepted by nearly all health care

organizations, which means changes to Medicare’s administrative rules are adopted

nearly universally. Medicare is also a large payer, through the Medicare Advantage

program, to the largest commercial payers, which could enhance Medicare’s ability to

serve as an administrative standard setter. This makes Medicare the only participant

with the market power to set administrative standards.” As Medicare for All seems an unlikely, though useful solution,

OTHER AVENUES TO CURTAIL ADMINISTRATIVE WASTE NEED TO BE

CONSIDERED. ONE SUCH METHOD WOULD BE INCREASED USE OF

BILLING SPECIALISTS TO REDUCE THE NEED FOR ADMINISTRATIVE STAFF,

AND, AS A RESULT, THE AMOUNT OF ADMINISTRATIVE SPENDING.

Billing specialists are a good example because of the decentralized nature of the

United States healthcare systems. Centralized billing, even by a third party, would

help to reduce costs. As noted here, “Germany and Japan both have multiple payers

but centralized claims processing. Despite having more than 3,000 health plans,

Japan’s administrative expenditures were a stunningly low 1.6 percent of overall

health care costs in 2015, one of the lowest among OECD [Organization for Economic Co-operation and Development] member nations. In their analysis of three universal health care options for Vermont, including single-payer, researchers William C. Hsiao, Steven Kappel, and Jonathan Gruber estimated substantial savings from administrative simplicity from each option. The two single-payer options they examined would result in even greater administrative savings of between 7.3 percent and 7.8 percent, depending on the rate-setting mechanism. The group estimated that a third scenario, which would establish a centralized claims clearinghouse while allowing multiple payers, could generate savings equal to 3.6 percent of total expenditures. This suggests that about half of the total administrative savings from a single-payer system could be obtained within a regulated multipayer system.”

THUS, BILLING SPECIALISTS, ESPECIALLY OUTSOURCED SPECIALISTS,

CAN HEP REDUCE OVERALL HEALTHCARE COSTS.

As this article notes, “This process is more straightforward than in-house billing for

medical practice staff. They can scan and email superbills and other related

documents to the medical billing service provider.

Most medical billing service providers charge a specific percentage of the collected

claim amount, with the industry average being approximately 7 percent for

processing claims.

The convenience factor is a major reason that medical practices choose to outsource

their billing. A provider handles all the data entries and claim submissions on behalf

of the medical practice. They also follow up on rejected claims and even send invoices directly to patients.

If a medical practice is using electronic health records (EHR) software, then this

process becomes even easier. Practices can store information from a patient’s

superbill in the EHR and securely transfer data to the billing service provider using

the interoperability feature. This eliminates the need to manually scan and send

documents.”

There are benefits to in-house billing as well. The previously mentioned article

mentions that “The in-house billing procedure for processing insurance claims

involves many steps that are universal to every practice.

First, the medical staff enters information into the medical billing software from a

superbill that’s prepared during a patient’s visit. The superbill contains specific

diagnosis and treatment codes, along with additional patient information that the

insurance company needs to verify claims.

Using the software, the practice submits the claim to a medical billing clearinghouse,

which verifies the claim and sends it to the payer. The clearinghouse scrubs the claim

to check for and rectify errors (for a fee) before sending it to the payer. By not

submitting claims directly to a payer, the practice saves time and money and lowers

its claim rejection rate.”

BILLING SPECIALISTS, EITHER IN-HOUSE OR OUTSOURCED, ARE AN

EXCELLENT WAY TO REDUCE OVERALL HEALTHCARE COSTS.

By reducing administrative waste, costs, in general, can be reduced. This also means

those savings will, at least in theory, be transferred to clients. This is especially

important for small businesses, who are often the hardest hit when it comes to paying

for health insurance. As demonstrated, a major issue for health costs and their

increase is related to all the administrative costs.

Several studies have shown this to be true. As referenced in this article, “A new study

from Stanford University finds that

THE TIME EMPLOYEES SPEND WITH INSURANCE ADMINISTRATORS

CLEARING UP QUESTIONS AND ISSUES-CALLED “SLUDGE” BY

RESEARCHERS-HAS COSTS IN THE TENS OF BILLIONS ANNUALLY.

The study, led by Jeffrey Pfeffer, a researcher, and author found

THAT THE DIRECT SOTS OF TIME SPENT BY EMPLOYEES ON HEALTH

INSURANCE ADMINISTRATION WAS APPROXIMATELY $21.57 BILLION

ANNUALLY.

with more than half (53%, or $11.4 billion) of those hours spent at work.

The study noted that excessive time spent on managing benefits can have several

negative outcomes. “Red tape can exert significant compliance burdens on people’s

accessing rights and benefits, thereby imposing time costs and depriving people of

resources or services to which they are ostensibly entitled.”

Various measures can be implemented to help reduce the costs of healthcare.

Eliminating administrative waste through the use of billing specialists is one of these

methods. Not only can such specialists curb waste, they can also provide a cohesive,

centralizing force to a heavily decentralized system.

Kaspersky Antivirus for PC Info – About This Security Solution and Its Flexible Subscription Plans

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It offers protection all types of viruses, dangerous apps, suspicious websites, phishing attempts, ransomware, and more. The security is designed to protect the computer without getting in the way. It works seamlessly and quietly in the background and receives automatic updates so that you’ll know your antivirus is being kept up to date at all times.

There are different levels of protection to choose from: Basic, Internet Security, and Total Security. The free version of Kaspersky Antivirus for PC provides core protection, but nothing else. Internet Security includes all the tools required for preventing malicious attacks and for detecting malware behavior, as well as privacy tools to help you keep all of your online transactions and banking information secure.

There is also an option to upgrade the antivirus by paying a one-year, two-year, or three-year fee to protect 3 – 5 PCs. This is a good option if you have a home network or small business you need to secure. It automatically scans your computer to find threats, including the new drive-by “crypto-mining” infections that could seriously damage the computer’s performance if you not handled properly. If your PC gets infected with this, Kaspersky’s technologies help to save and reset it.

Setup and Management of Kaspersky Antivirus for PC

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Business Plans – Your Roadway To Success

Experts say that a strong business plan is one sure step in the direction of success. So, what is a business plan in the first place? It is defined as a document that outlines the functional and financial objectives of a business. It also contains details of the budget involved and the goals to be achieved.

Everything on earth is tending to become compact. Gone are those days when a sea beach was described in a thousand words. Today, a similar description is possible with a powerful visual and a string of strong adjectives in only a few words. A mobile phone today is slightly bigger than your thumb. Similarly, a business plan is no longer a document of a hundred pages. Nobody wants to know your business. They want to know your views, your goals, your objectives and your plan of action.

How Well Can A Business Plan Be Implemented?

o Simplicity of a business plan – is it understood by one and all? Are its views and objectives clear?

o Specificity of a business plan – are the contents measurable? Are all the activities dated (initiation to completion)? Are all the actions distributed among personnel clearly?

o Real nature of a business plan – are the objectives and targets real? Are the goals set within a specified time achievable?

o Totality of a business plan – is the plan complete? Does it have all the necessary elements to outline your business goals?

A business plan has multiple uses. It can be used to start a new business enterprise, take a loan or to find good investors. There are many other reasons for which you need a business plan. You should first find out why you need a business plan.

Why Do You Need A Business Plan?

o Outline objectives and set goals to achieve them

o Prepare regular business review outlines

o Start a new business enterprise

o Decide on a value on a business for sale and legal issues

o Outline agreements between business partners

If business plans are conceived for different purposes, there must be different business plans for different kinds of ventures. Business plans are also known as growth plans, internal plans, investment plans and so on and so forth.

If your business plan is for internal study and revision, there is no need of background details of your organization because you are already aware of them. You need to add that only if your business plans are meant for banks and other institutions.

What Are The Different Types Of Business Plans?

– The most basic of business plans are the start-up plans that clearly outline the steps for a new business venture. They include details of service provided or product offered, market value of the same, implementation strategies, market and financial analysis. The basic structure consists of a summary of the company, ending with details of financial transactions and expectations for the first year.

– An operational business plan contains details of dates, deadlines and milestones. It is often referred to as an internal business plan.

– A strategic business plan aims at higher levels of target and does not deal much with dates and deadlines. This business plan is more of future and growth oriented and focuses less on facts of the company.

– A growth or expansion business plan focuses more on one or more subset of the business. There are variations of this kind of business plan. If it is meant for a new investment, it will obviously include the background of the company.

– A feasibility business plan is your entire business in bulleted form. It includes the summary, the mission and the vision of the company, the USP of the business enterprise, expected financial outcomes etc. The main purpose of this business plan is to test whether this business is worth a venture at all.

The Seven Points Of Business Plans

Business plans usually cover the following 7 points. Of course, they will vary in detail, depending on the purpose of the business plan.

– Mission Statement – your business plan must explain clearly why you want to start a particular kind of business in the first place. It doesn’t have to be long, but it needs to convey the message clearly.

– Business Description – this is the place where you talk about your business. What is it that you are trying to sell or provide? What is the USP of your business?

– Goals in view – here, you describe both your short term and long term goals. Short term goals may include your plan to acquire office space, provide a proper business name, apply for a business license etc. Long term goals include answers to where you see your business ten years down the line, opening new stores etc.

– Prospective Customers – who is your target audience? Why will they need your service or product? How well do you understand their needs?

– Competition Analysis – this helps you rank your business venture in the market. Who are your competitors? If their focus area is too competitive, try for a niche market that is comparatively less competitive.

– Financial Considerations – be realistic and optimistic about your finances. Make sure to spend only that much with which you are sure to receive returns. Or else, go in for a small business loan till your business can take care of its own expenses.

– Marketing – sell your ideas before you sell your products. Advertise your products everywhere you can think of. Don’t miss out on both offline and online publicity. If you get a chance, exhibit your product or service at local communities and organizations.

Do’s And Don’ts Of Business Plans

Your business plan should:

a) Set concrete goals and deadlines

b) Distribute work among people and departments and set deadlines to achieve the goals

c) Maintain a steady ratio of implementation to strategy to 10:1

d) Provide a platform for regular review and discussion

Your business plan should not:

a) Display your knowledge about your field of expertise

b) Be too lengthy – people lose interest easily

Not all businessmen and women are good planners. It has often been seen that a business fails because of the lack of a good business plan. That is one of the cardinal mistakes for an entrepreneur.

Business Plan Mistakes

Experts have identified some common mistakes regarding business plans. They are:

– No business plan – many business ventures begin without any plan. Plans are written out in a rush only if the clients or banks or investors ask for the same. It is often seen as unnecessary because the business is more important. Imagine the condition of a house without a plan. You will get lost midway in heaps of concrete and steel. Similarly, you will get lost in ideas and desire to implement them.

– Cash is more important than profits – business is not the same as profits. Cash is the main player. Only if you have cash to spend in the beginning, will you get profits at the end of the day.

– Ideas don’t sell – your business sells because of hard work, perseverance, cash and a lot of common sense. Your idea does not have to brand new. Old wine is better than new ones. Why? People trust age and experience.

– Fear factor – a business plan is as necessary and as routine as making a travel plan. You don’t need to be Einstein to chalk out a business plan. You just need to think straight and pen your thoughts.

– Specificity wins – focus on tangible results, instead of trying to be the best. Results matter and they tell you everything.

– Fit all business plans – your business plan should work for bankers and investors as well as internal review and corrections. Don’t make individual business plans for individual purposes. Rather, concentrate on your business.

– Everything cannot be important – you can have only a few priorities. 20 priorities are vague and they clearly show lack of strategy and of goals.

A business plan is the first step of starting a business. It is neither easy nor difficult. What is a business plan about? How do you implement a business plan? What do you include in a business plan? What are the ‘must have’s’ and ‘have not’s’ of business plans?

Whether it is travel, study, cooking or any other activity involving a process, planning is usually the first step. The same holds true for business. Business plans are probably more important than the business itself. For example, the plan for a house is more important than the house itself, though it is the house that people remember and not the plan. But the house wouldn’t stand without the plan, would it?

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