Softbank Vision Fund: What you need to know

Venture Capitalists can make you dreams come true as a prospective entrepreneur. How different is SoftBank? Read on..

Enter SoftBank

The world of startups is full of pitfalls, but also filled with investors looking to help fund the next big thing. Over the last decade, a whole economy has been created around it – an economy that has produced many successful gadgets, but also many outright failures.

Softbank is one of the biggest players in this economy, its Vision Fund is one of the most coveted funding sources for startups.

The sheer size of the fund, valued at $100 billion, is said to be disrupting the whole venture capital industry by raising the prices on companies and investments. As such, it’s one of the big hitters these days, yet it’s difficult to understand just why it is so important.

Why is it necessary?

Startup companies, particularly in tech, often face a huge problem from the get-go: funding. It used to be, decades ago, that you could start producing whatever widget you wanted by hand, sell it locally, and slowly expand.

That won’t work today.

The global economy has shifted, and today, success in tech often requires having a wide reach and mass production. This means that any new venture needs prohibitive amounts of money to begin with, amounts of money regular people don’t really have.

Does it just give you money?

Of course not. While Vision Fund’s funds are big, it isn’t bottomless – and they aren’t a gift, either.

Vision Fund is an investment program, its core philosophy being that it’ll give entrepreneurs the money they need so they can focus on building a successful company without the financial issues they’d otherwise face.

Softbank is known for being a permissive investor, but it’s still a capitalist undertaking – which means a profit is eventually required.

Moreover, Softbank will naturally be entitled to a share of whatever profit your company makes.

You could, therefore, see this funding as a loan of sorts.

What if no profits are made?

One of the big problems of venture capitals is that many companies indeed never make a profit. This is pretty common when companies try to fix problems that aren’t there, thus failing to find a market.

The Venture Capital world is full of poorly planned, ill-conceived gadgets somebody somehow thought were the next big thing that led to millions of dollars wasted.

In theory, investors review proposals and choose those that are the most likely to succeed and help change our world.

In truth, venture capitals are often seen as a way for certain individuals to promise investors everything, deliver nothing, and live like millionaires.

Softbank’s Vision Fund, however, has a method to try and stop this.

Fighting mismanagement with clauses

As usual with venture capital contracts, if your project doesn’t take off, the investors lose their money. That’s also true of Softbank’s fund, and whatever money was spent on getting the company off the ground will be lost.

Just as well, if the company turns a profit first, then it stops doing so, the fund itself will take the hit.

That is true, however, only for the money that was actually spent on the company.

Softbank’s Vision Fund has a peculiar clause that hopes to fight against venture capital scammers, those who live like millionaires on investor money and then return nothing.

Money spent on management salaries and bonuses can be taken back if the company fails.This doesn’t only extend to the initial investment, but also earnings.

Earnings are divided between the company and Softbank, but if the company stop earning any money soon, managers are expected to pay back a part of the money they took to Softbank.

This makes keeping the company efficient a priority above all things, since results are not just encouraged but expected.

Is this really changing the landscape?

It’s still early to tell. Softbank works in a different way from other funds, since it requires entrepreneurs to have some skin in the game. They’ll fund projects, but they don’t take the full cost of a failure – meaning companies receiving funds need to plan around the idea of having to pay back a part of it.

While the logic is sound, it also means only people who can take a risk can participate – thus thinning the eligible startups and offering the services mostly to people who already have means to begin with and who can take the brunt of failure.

Still, in a world where venture capital is a thing, Softbank Vision Fund has caught many eyes and helped many companies, even when their tactics and clauses are often reviled by others.


The emergence of venture capitalists like SoftBank really makes the difference. With funding that can bring the entrepreneurs dream to reality, it is world heralding.

Blockchain Innovations, Affiliate Marketing, and The Changing Face of Digital Marketing

Blockchain is here, and it is changing the preset notions on how to conduct an online business. How is your business changing today? Read more..

The scalability, transparency and efficiency of the Blockchain is a huge boost for digital product marketing.

To take advantage of this edge, businesses need to look at how best the solutions currently available can give a leap to realization of organization goals, cost reduction and profitability.

There are over three billion people in the digital world who daily access their emails, websites, and search online for clues, play online games and carry out a variety of other activities.

The growing number of people with Internet access and connectivity has created a huge market for people who have one, two or more online digital products to offer to the rest of the world.

There is an online digital product for virtually every field of human endeavor, and this is an affirmation that many fast-thinking people are already cutting their slice of this new frontier.

An online digital product is not inferior to its physical alternative except that it can be accessed via a mobile phone or portable device and you can easily access it wherever there is Internet presence.

The Blockchain and Fast Moving Online Digital Product Scenarios

The following examples provide a gateway to success with an online digital product;

Digital Books and Blockchain

EBooks are probably the commonest form of digital products as a result of the early introduction of books in digital format.

Digital books are now widespread and can be accessed by such devices as the Kindle, mobile phones, and other portable devices.

The digital book can be produced by using widely known platform owners like Kindle, Lulu, and Kobo amongst others.

You can decide to ignore these platforms and self-publish through a free medium like Adobe PDF and sell digital downloads through your website or affiliate website of your preference.

The ease of payment and download access to digital books makes it an attractive option for many people with internet access.

Your digital books can become your online business as you make efforts to market and sell them through the various outlets available.

The Blockchain has an edge for publishers here as it can remove the need for middle men and help the publisher reach consumers directly. Usage of cryptocurrencies will also remove the burden of remittance difficulties.

Online Courses and Blockchain

Today’s world is a knowledge-driven marketplace with multitudes in search of one thing or the other to meet their needs.

Learning is recognized as a process that lasts throughout a lifetime and the foresight to create and locate your audience or recipients will unlock the opportunity for an online digital product business along this line.

You do not need to have an accreditation or institutional recognition for the course you can comfortably offer online.

It is only important that you have a grip on your turf and ensure that your materials are well- researched, packaged and presented.

You will be amazed at the reach of your online digital product across the globe when you use a trusted platform to market your specialty.

Known websites like Udemy, iVersity, Fedora amongst others; rake in millions in sales yearly for courses they offer.

The Blockchain can help course developers earn more if tokens are used for access and remittance for each course developed.

The Affiliate Scheme and Blockchain

Shutterstock Image

The affiliate scheme is perhaps the most proven form of an online digital product as it has survived the early years of the Internet bubble to the present day.

By the way, it is the platform for many MLM (Multi-Level Marketing) products.

You can build your affiliate scheme around a fast-moving product, service or any item that is beneficial to people and is marketable.

Last Lines

An online digital product business is the fastest and logistics-nightmare free business you can ever be involved in.

Any business with a website and a payment gateway enabled for PayPal, Credit Cards or Bitcoin, with an effective marketing plan for a beneficial product, is destined for success.

How Cryptocurrency Payments Are Reducing Transaction Costs Globally

One area that cryptocurrencies impacts the global stage is price reduction. Low transaction cost and faster payments make account settlement good to go.

Cryptonews Image

It’s not news to anyone who has been following the cryptocurrency trend that, while they have attracted lots of attention, they have also failed to penetrate our economies as well as some analysts expected they would.

Indeed, cryptocurrencies have run into several difficulties, putting them into the odd position of being household names, but not household items. That is, everyone knows what a cryptocurrency is, but most people don’t own any or know how to use them.

Yet while the cryptocurrency craze has brought few widely recognized improvements to our economy, there is one specific area where it should, as penetration grows, show a great improvement in most peoples’ lives.
That area is transaction costs.

High costs we ignore

Bank transactions are never free. Every single transaction that happens involving a bank, be it a debit/credit card purchase, a bank transfer, issuing a check, or even getting cash via an ATM, has a cost.

The allied cost can often be small enough for people not to notice or care, and in some cases the cost is paid by our counterpart, so we completely ignore their existence.

However, these costs add up. It might be a few cents here or there, but little by little, they end up making a dent on our finances – we just don’t notice. When we hear that it costs $10,000 to move $1,000,000, we assume that’s a rich people problem.

We don’t have a million dollars to move, so why should we worry if the rich are paying a lot? They have a lot, so it’s only fair.

Except that it’s not the raw numbers that matter. It’s the percentages.

Fortunes are made cent by cent

Now, let’s assume instead of the 10K example, I tell you that your bank charges about 1% per transaction. It’s little, right? What’s one dollar for every hundred you move? The bank has to make money, so it makes sense they’ll charge.

Yet it adds up. That means that if you move only a thousand dollars a month using your bank account – a small amount of money – you’re paying your bank $10 a month. Which amounts to $120 a year.

Reconsidering it yet?

Crypto to the rescue

Cryptocurrency transactions have been somewhat demonized by the media. While most claims against them aren’t false, some have been overblown or reported as inherent problems with crypto while being transient ones, results of the economy rather than poor design.

While cryptocurrency transactions can be slow – the Bitcoin and Ethereum networks both have but a fraction of the capability of Visa and Master Card – that might not be a problem for long. New blockchains are being currently developed with the aim of solving the transaction bottleneck.

As for the issue of value fluctuations – where the initial wave of worries about crypto transactions being expensive – crypto markets are stabilizing. And any cryptocurrency that enters widespread use will, by virtue of its widespread use, gain enough stability that day-to-day price changes won’t be huge.

Fairer costs at no cost

Let’s go back to the $1M example, since it’s good to illustrate just how much money you might be losing once all things add up – and let’s be clear: while you might not regularly move a million dollars, the average American moves more than a million dollars through their lifetime.

On the Bitcoin network, known for its scalability problem and slowness, you could move more than a hundred million dollars for the paltry sum of… ten cents.

That’s several orders of magnitude lower than those of a regular bank. As such, some of crypto’s early adopters have taken to performing their large-scale transactions through the blockchain, since whatever they lose from them taking longer, they more than make up on savings.

Not that they always take longer. Transactions inside a same bank are instant, but between banks – or countries – aren’t anyway.
The point is, using crypto you can go from 1% transaction fees to 0.01% fees.

Only one drawback…

While banks use percentages to calculate transaction costs, cryptocurrencies use a more lineal approach, usually tied not just to the amount of money but also to the current state of the blockchain.

This means charges move between smaller amounts, but depending on the blockchain they might have minimums to be paid. Over the Bitcoin blockchain, for example, the minimum amount for a transaction is ten cents.

This means that you might be able to move a hundred million for that much… but if you spend $5 on crypto for an ice cream, it’ll cost you that much, too.

Thanks to this, for now, cryptocurrencies remain a great option – for larger transfers. Their fees vary between ten cents and five dollars. This depends on the blockchain, the amount, and how busy the chain is at the time.

However, this should change. As the scalability problems are solved, transaction costs – and times – should halve. Eventually, we might see small charges for large transactions, and almost nonexistent ones for smaller ones, turning cryptocurrencies into the best way to save money overall.

Last Words

As for now, the writing is on the wall for many companies: Cryptocurrencies are a way to save money in transactions. Not only that, but they offer an alternative to dealing with regular banks, and can in some cases be faster than regular bank transfers.

It’s due to this that, while cryptocurrencies haven’t yet gained mass acceptation, several important parts of our society are actually dealing with them already. It’s just difficult to argue with a 99% reduction on transaction fees.

Why Supporting a Local Economy is a Boost For Entrepreneurial Efforts

The gateway to business expansion is securing patronage. A local business has a chance to succeed when its goods and services receive local attention. image

Local business will always get a boost when organizations and individuals patronize such enterprises.

When you realize that many businesses are family-owned around southern Indiana like most parts of the world, then you can begin to give a thought to the impact of such enterprises on local economies.

Every business that employs one or more persons can be seen to be supportive of the local economy considering that they provide a means of gainful employment to such individuals.

Boost to Local Economy

When the factors of production such as land and finance, manpower are engaged, invariably, there is a boost to the local economy as there is added activity, increased aggregate turnover in the particular sectors amongst other considerations.

When you patronize the products of a commercial roofing company around you, you are providing an avenue for the tax revenues to be boosted and for the company to grow or expand its turnover.

Contribution to a Healthy Society

The patronage of a local business will enable such enterprise to employ more people.

And when this happens, more persons are given the opportunity to boost their personal economy, attend to personal needs and bolster the aggregate wellbeing of the community.

The quality of life in such places also receives a boost with more funds made available through patronage of local goods.

Helping the Social Good

The social good gets a boost when more people are employed; local companies pay steady taxes and meet their obligations or attend to corporate social responsibility.

The patronage of metal roofing products made in your community could mean an increase in what such an enterprise can undertake for its local community.

whether this means expansion of the local park or provision of scholarships for higher education, such an effort is worthwhile.

Contributing to a Richer Nation

The Gross Domestic Product of any is the aggregate of the output within the local economy and with more generation of turnover there is an increase in this value.

Patronizing local products within your region means that on the whole, the state’s GDP will be boosted by the margin of that patronage.

So, the riches of the state gets a boost with efforts made to encourage production through buying local.

Better Employment Data

Buying local helps to keep the enterprise in operation and this helps in no mean way to ensure that there is a boost in the number of employed persons around such community.

Whether the local business is into cottage operations or such technological advanced processes as production of tapered insulation system components, the overall effect is laudable.

The basis for patronage of local businesses is well grounded and is the reason for such widespread legislations seen across several countries.

Patronage opens the door for business growth, funding expansion and development of new product lines.

Security Safeguards For Cryptocurrency Transaction Management

Managing the safety of cryptocurrency transactions is possible and here is what you can learn. Image

A lot of new cryptocurrency exchanges are growing daily and rapidly worldwide. With the increasing number of cryptocurrency exchanges in the world today, a lot of them are faced with the risk of cyber attack.

So, it is crucial for all investors who want to invest their money, and a lot of their money should look out for red flags when choosing cryptocurrency exchanges, as they should also do their homework and a proper background check on the cryptocurrency exchange as relating to their fees and security safeguard.

With the increasing interest of investors who are willing to trade, in this rapidly growing space, there is a need for security to safeguard cryptocurrency exchanges. Cryptocurrency exchangers are just like the e-brokerages from the investor’s standpoint.

The global cryptocurrency market has been valued above $700 billion, but the market is still lightly regulated. Some experts in cryptocurrency exchanges say people who want to invest their money in cryptocurrency should choose an exchange that suits their individual needs.

Generally, any good cryptocurrency exchange would offer a safeguard against money laundering, and set in some procedures to know their customers, like a cell-phone application for trading and tracking the price, and a quick and easy way to move cash between bank account to the site’s wallet.

But beyond these universal must-haves, there are still some key consideration that needs to be set in place to ensure ease of use and security.

Disaster Mitigation

Many exchanges have several servers that are hosted at different locations preferably different countries, just to be safe. As the popular saying goes, “never put all your eggs in one basket”.

Disaster mitigation of cryptocurrency exchanges in simple terms is best understood as the process of responding to a major failure or let down of the system as the system switches to another server that is being hosted in another location.

The disaster could be natural or man-made, so incorporating cryptocurrency to managing and mitigating disaster is attainable.  Let us assume that there is a hack, and the attacker gained full control of the entire infrastructure of the exchange.

Using false user pairing, the attacker can easily trick the 2FA user channel. But even when the hacker injects false user pairing into the HSM, perhaps the HSM fails its periodic consistency check, it will automatically shut down the signing plug-in until reactivated by an administrator.

Basically, the shutdown of the server is to ensure that the hacker stays out of the server if a server is hacked or broken; and during this time the exchanger has to switch to its other servers, to ensure continuity of trades.

For example, Binance has multiple servers offshore, even though they have multiple offices in Asia. Their servers allow them to be able to handle more than 130 coins consistently, and if a server gets broken, they rely on the other servers while they fix the broken one without causing a halt to any trade.

Exchanges Server Distribution

Basically, cryptocurrency do not have a central computer, but they are distributed across a network of typically thousand or computer. A network without a central server is called a decentralized network. Since cryptocurrency has no central computer, it means no third-party escrow intermediary is required to hold the funds of the customers in the exchange process.

Due to cryptocurrency decentralized network, transactions are faster and at a cheaper rate. The removal of the third part authenticator actually reduced the charging rates and the lag time before a transaction is processed.

The distributed servers of the cryptocurrency exchanges have made this system even more difficult to potential malicious hacks. Because of the decentralized network, every entry points that hackers could have used to hack the system have been blocked. Meaning for a hacker to get into the system, they have to compromise more than half of the whole network.

Overseas Server Location

 In other for an exchange to further improve, they engage themselves in acquiring some foreign servers. Some bit exchangers like coinbase, bitterex and the likes, makes use of cloudflare for caching. And cloudflare has servers in most part of the world.

So, you may notice that perhaps you are in say Europe, and you are making connections to servers in the United State of America, when there is a closer server to your location, say probably in Sofia (Bulgaria), or Belgrade (Serbia).

Safeguarding Cryptocurrency Transactions

A lot of cryptocurrency exchanges are keeping the vast majority of about 97% of its assets in a cold storage. This is the best protection they can have. The underlying ideology behind this is to get their assets totally offline, out of the reach of hackers.

But despite this, to properly function normally, they still need to have a type of wallet they can use to connect online with their users. The wallet cryptocurrency exchanges use to connect with its user online is called a hot wallet.

 The hot wallets are controlled with APIs, and the hot wallet is used to approve the order of customers who want to withdraw of deposit in their accounts. Because this cryptocurrency exchanges have to validate the transaction of its users with their wallets, the keys must be live.

Transaction Authentication

In a transaction authentication of a cryptocurrency, the wallets are designed with specialized software that can calculate the balance of the user by keeping track of all incoming and outgoing payments. The wallet is also designed to calculate the fee that the user would pay to the miners of the network to confirm or authenticate the transaction.

 Once a user sends a certain amount of cryptocurrency, the transaction gets broadcasted across networks, and within a few seconds the receiver would see a pending transaction on his or her wallet.

Then a miner would add the transaction and mine a block which includes the transaction. Once enough blocks have been mined, the transaction would be confirmed with ease.

Cryptocurrency offers a new frontier for many investors around the world, and there is no doubt that with the necessary safeguards in place, it can be a veritable goldmine.

What to Consider When Choosing a Funding Option for Your Startup

Every aspiring business owner needs to answer some basic questions while looking for funding.What could these be?

The Entrepreneur’s Launch-Out Guide

Elon Musk by

As an entrepreneur, you have probably done your background checks, developed a concept for your startup, and may also have gained a reasonable customer base to attest to the solutions your startup provides.

You are probably also raking in some revenue already. One thing is certain, at one point or the other, you would want to expand your startup or take some other financial steps and seeking external funding would become inevitable.

Threading a path of success as an entrepreneur is largely dependent on the business idea and strategy you have got up your sleeves, and the kind of funding model you deem comfortable.

However, majority of entrepreneurs lack the legal and financial know-how required when choosing which funding option suits them more.

The overarching consideration is how to choose the best funding option.

Financing Methods and Best Approach

Startup funding is basically in two folds: Alternatives and Traditional financing. Traditional financing includes Venture Capitals (VCs), Equity, Incubators and convertible debt funding.

Alternative financing on the other hand include venture debt, loans, and revenue-based funding. Narrowing down on any of these financing methods will be determined by the nature of your startup and the stage it has attained.

The best approach to finding a suitable funding model is drafting a road map and providing genuine answers to the questions below:

Your decisions should also be framed around the nature, valuation and culture of your company, equity and of course, how much control over key decisions you wish to retain.

Why has funding become necessary at the moment?
What are the funds needed for?
How much capital cost is required?
How do you intend to secure startup capital?

Key Factors to Consider

Before choosing a funding option for your startup, there are some key factors that will aid your decision. Some of which are available funding options, startup goals, control retention, legal advice etc.

These factors will guide you as to how, where, why, when and what; in terms of external funding models.

Here is an overview of some of the important factors you should consider before adopting that financing method.

Set Goals and Milestones

One of the first point of attraction for investors is Vision. How far do you intend to drive your startup?

Articulating your vision, creating excitement about your company and exhibiting positive energy; these are the things that excites and interests a potential investor. You must also consider the following:

What are the non-monetary and monetary goals for your startup over a period of time?

Achieving these set goals will require how much capital?
What do you intend to do with the capital?
Can a particular funding option aid your startup goals?
What milestones can you achieve in the short run that will be a game changer and what can an investor expect in the long run?

These are the key points that you must be able to put together provided you are open to investors. Nobody wants to invest in a business without a future and of course no business owner wants to run into debts.

Equity Financing and Control

Equity financing has proven to be a sound and attractive option for startups because all the cash is splashed by investors. In most cases, startup owners do not have to bother about repayment plans; investors take all the risk with the hope of profitable returns.

Having decided to externally sought funds for your business, you must be aware that you also cease to retain the larger share of profits and sole control over that business even if you still remain the majority shareholder.

Some people would rather lord it over a small firm than be part of a bigger company that can make much impact.

It is, however, important to meticulously negotiate and document equity investments to ensure that the interests of all and sundry are adequately protected.

Rushing into an equity investment deal just because you are desperately in need of quick infusion of capital could put you at a huge disadvantage.

Ability to service loans/ venture debts

Provided you are already raking in a stable cash and from all indications, you can pay up debts, a business loan or venture debt may just be what you need rather than equity investments.

With business loans, you still retain absolute control over your startup. Lenders in this case will most times request exorbitant interest rates on repayments and will also demand that debts are fully paid within a set time.

This type of financing may require guarantor(s) who are also responsible for loan repayments. Venture debts are often the quickest means to financing a startup because its negotiation proceeding is often straightforward compared to other means.

A business owner must weigh up the benefits of ownership retention plus high rates on loan repayments. This ties up with several business and personal risks should the startup fail to rake in funds sufficient to repays loans when making financing decisions.

If you are able to service loans within stipulated periods, ceteris paribus, this funding option may just be good enough for you.

Unique Selling Proposition

The best way to describe this is – What value do you provide to your customers? What customer related problems does your business solve? Is business value enough to attract investors or secure a loan?

Before going out in search of funding for your business, it is important that there exists a satisfactory customer feedback and interaction base.

Your customers must have validated your value either via testimonials or other means. Ensure that you document these testimonials because at a stage, certain investors or lenders might want to put a reference call through to your key customers before splashing the cash.

Understanding Market Share, Growth and Size of Target Market

Majority of investors abide by a particular investment policy; some only invest in the tech market while other invest in vertical markets.

The ability to clearly articulate your market growth, forecast share, and market size is key to securing a credible financial model. Having a holistic idea about market factors will be of great help when seeking out the best funding method from a pool of options.

Convertible Debt Financing

This is very much the same as venture debt because periodic paybacks apply, and debts must be settled in full within a set period (52-76 weeks).

Also, ownership rights do not depreciate immediately. Supposing debts are not repaid after set date, the lender becomes a shareholder in the company by converting debt to equity under certain predefined terms.

This financing model is very predictable in the sense that businesses are aware of loan repayment or renewal timeline.

Convertible debt can however, become a threat to the owner if he/she has no interest in sharing business ownership rights. This takes a long time to obtain because conversion, repayment and equity structure (lender) will have to be negotiated

Flexible Financing

This is often referred to as convertible equity. In other words, Startups don’t spend the cash, investors do, with no guarantee of recouping capital. This financing model is quite different from equity financing.

In this case, investors do not get to immediately exercise any sort of control over the business neither do they get a share of the profits immediately – all of this only happens at a later date and it is dependent on the occurrence of predetermined events.

This is often the case for publicly traded companies; investors can convert their shares into equity, therefore, acquiring all the privileges and rights as it were with the initial owner(s) of such companies.

Securing flexible financing can be overly slow because of its terms and conditions associated with conversion. On the other hand, discussions about repayment structures or interest rates do not take place, hence, can be quicker than convertible debt.

Last Lines

A successful startup requires careful and solid planning right from very start either with traditional financing or alternatives. However, hastened financial decisions without adequate understanding of the associated terms and conditions could be detrimental to the success of a business.

It is therefore important to seek legal advice before choosing any funding model for your startup as this will help juxtapose the risks and benefits involved and to choose the best option for your business venture.

Your Business Plan and You

Investors and entrepreneurs have a need for a winning business plan. Here is a look at some underlying notables.

The Must-See Notables For Crafting A Winning Business Plan

It has been observed that about 20% of new businesses pack up within the first year of their establishment, while a majority do not exceed a lifespan of five years. Many reasons can be adduced for this recurrent unfortunate phenomenon, chief among which is the use of a shoddy business plan.

It is often said that if you fail to plan, you inadvertently plan to fail. Every new endeavor requires an in-depth research on several issues surrounding the area of interest. Such a research will help you understand the concepts and how to develop an effective modus operandi to get intended results.

This is the reason every intending founder of any business needs to have an unambiguous business plan.

A great business idea is only the starting point of a promising business venture. What ensures the success of the business is a deliberate, in-depth and realistic approach in building a strategic plan to establish and grow the business till you can break even.

Though it is possible to eventually make a success out of a business without an initial business plan, it is a risk equal to traveling to an unknown place without a map or leading whatsoever.

This guide thus gives a case on the necessities of a business plan, and the possible drawbacks of not having one.


The process of developing a business plan helps put your dreams and vision for your venture into perspective, enabling you to sort out unrealistic expectations and see more clearly.

More often than not, the excitement of having a potential solution that meets perceived needs of people in an area overshadows a person’s sense of caution and tact.

A business plan enables you to do some research that refines your vision to fit the real needs/wants of your target audience. A business plan also provides a document to critics who can help point out inadequacies, risks and fantasies in the business idea; helping to tweak the plan to a reasonable level.


The major danger upcoming/startup businesses face is running out of money. It is necessary to have a near-perfect idea of what total running (capital plus variable) costs will amount to over a specified period of time, so as to draw up how to gather the required fund.

This is one of the things a well drawn business plan enables a business owner to achieve. You can safely avoid running short of cash without making any profit from the business.


During the research leading up to writing a business plan, the prospective business person is able to spot possible risks and challenges to be encountered in the course of the business. This makes it possible to develop strategies to combat the risks in the event of their occurrence.


One of the importance of a business plan is to give a prospective investor an overview of what he intends to invest in, the risks and financial promise.

For instance, a bank would need to scrutinize the business plan of a business man seeking a loan facility to finance his business to check if the business is viable enough to repay the loan with accruing interest under the stipulated time frame.

Individual investors also need to look at the business plan to know if the business is worth the risk of their investment and see terms of repayment in case the business flops. It should also state what amount of equity the owner is providing investors if returns are not in cash.


A business plan usually serves as a confidence booster in the bleak periods of a business. A look at the plan after a while will show how far you have come and overcome obstacles on your path in the business, strengthening your resolve to solve the present issues confronting you.


Just as a traveler going to a new destination needs a map and maybe a GPS device for direction, an intending business owner needs a business plan to give a direction from the start of the business up till when he breaks even.

A business plan could also serve as a template for future expansion. It is a reference that can be looked up to know which milestones have been achieved and which challenge is next to be taken up.


Challenges, new technology and emerging market data sometimes make a business owner lose originality and focus, swaying the business away from its foundational goal. A business plan therefore is important as a medium of checking if the current business philosophy and targets are in line with initial goals, and enable correction and a reset if the business has gone off its course.


A business plan carefully highlights the different parts of the proposed business model and their intricacies and interconnections. This gives a broad view of the relationship between the parts of the business and also the mutual effects of the capital elements (labour, capital etc.) on one another. This outlook helps to determine how each element can be varied to create optimum results at the most reasonable costs.


One of the challenges emerging ventures face is choosing which business establishment steps to take at particular times, which options of marketing and distribution to utilize, among other service delivery options. A business plan helps outline the focus and goals of your business such that you know which options to pick above others, and which steps in your road map should be taken before or alongside another.


From the benefits outlined so far, it is evident that having a comprehensive business plan before launching a business venture is really important to its success.

A well-researched plan serves as an anchor for the owner to fall back on when challenges arise, as well as a tool for convincing potential investors on the safety and potential profits on their investments in the business.