- The purpose of creating a Conclusion for your Business Plan is to clearly state whether or not you wish to move forward with your business idea. You will back this up with the reasons why you have made that decision.
In this section we will:
- Summarise critical risks
- Itemise major assumptions
- Make a Go/No-Go decision We will take each one of these items separately below.
Critical risk summary
- A critical risk is a situation which may threaten the success of your business. It is something that will prevent you from moving forward with your plans. There are some critical risks that all businesses will share such as: having no customers, or suffering a sudden calamity to the building where the business is housed etc, but critical risks are rarely that extreme.
For your business, consider how you would deal with risks such as:
- a reduced number of clients than you anticipated
- a difficulty obtaining stock for a product line you were counting on
- an inability to recruit the staff you need
Are there any other key risks you feel it may be likely that you will encounter?
- For each risk, the next step is to figure out (ahead of time) how you would deal with it in order to keep your business moving forward and so prevent a calamity. This can be very simple. For example, if you feel finding enough clients is potentially a likely risk, you could increase your marketing (either paid or free). Both the risk and a one sentence strategy on how you will avoid or deal with this risk should be noted in your conclusion.
Stick to a maximum of just 3 critical risks – the 3 most likely scenarios you feel you may encounter and wish to plan for.
- An assumption is a best guess you have made in order to develop your business idea or make plans. It could be an estimate of the number of clients you will get in the first year; or that a particular product or service line will be more popular than another. We all make assumptions when first planning our business – it is often necessary in order to move our business idea forward. In the conclusion, any key assumptions you have made should be documented, along with the reasons you have settled on that particular assumption. Again, this does not have to be complicated. For example an assumption may look like this: “I have made an assumption that service A will be the most popular because it is the cheaper service I will be offering and so will appeal more to my target demographic. Therefore I feel I will have 50% more clients for service A than service B which is priced at the top end.”
Stick to detailing no more than your top 3 assumptions.
- Once you have summarised your critical risks and assumptions, it is time to take a good hard objective look at your proposed business idea and make a decision whether or not to move ahead with your business idea at this time. Your options for a Go/No-Go decision are:
- To go ahead
- To stop
- To reevaluate So why would you make each of these decisions?
1. To go ahead
- You may consider going ahead if: you are still as enthusiastic about the idea as you were before you started; that your confidence in the business idea has been borne out by a positive cash-flow forecast; and that the research into your industry has been positive.
2. To stop
- You may consider stopping and going back to the drawing board if: you feel negative about the idea now that you’ve considered all the variables; that your cash-flow is not looking like it will sustain you for long; that your industry or location seriously does not look as though it will support your business.
3. To reevaluate
- You may consider reevaluating if: you feel lackluster about the idea now that you’ve considered it in more detail; you have doubts about your cash-flow; you’re thinking the industry does not feel supportive of new business right now.
Remember, be honest with yourself. The success or failure of your business will depend on your self honesty, confidence and energy.
How did our Case Studies get on?
Here are a couple of examples from our Case Study participants:
Geoff Walker has never intended his business to be his sole income, though he would like to get to that point eventually. He’s happy to build up his business slowly. He says, “In terms of Risks to my business, I cannot really see any. The biggest one would be the loss of a client’s vehicle due to fire or accident in the workshop. I have put in place full insurance coverage for this eventuality. I have made an Assumption that I will continue to find most of my clients from car shows in the area – which is fairly well tested from the proof of the last few years while I’ve operated as a hobby business. I will be going ahead with my business.” Cindi and Wayne McCutcheon also have a proven business to use as evidence of their success. However, their ability to expand does rely on a bank loan for a portion of the cost of the new ready-mix truck. They say, “We have proven our business case using the assumption that we will achieve the same level of growth in Sherwood Park as we have for West Edmonton. There is a Risk that housing development will slow down if the economic downturn in the oil industry proves to be long-lasting. However, as we will be aggressively marketing the business through our housing development contacts we are confident that we will be able to get the truck up to capacity quickly. We will be going ahead with the business, on the assumption that we can raise the remaining funds we need from our bank or other lender.”
- It’s time for you to create your Conclusion. Complete the relevant section of the worksheet or create your own notes. Think about the 3 aspects of the Conclusion: Risks, Assumptions, and Go/No Go decision.