When you are getting ready to start a new business, many advisors will tell you that the first step is to create a business plan. That may be a good idea in some situations, but not always.
Table of Contents
What is a Business Plan?
A business plan is a formal document describing how your business will work. This can cover anything from day-to-day operations to longer term growth strategy. It should be all encompassing of any detail of how your business works.
It should include items like a company overview, management team backgrounds, competitive environment and demand, marketing strategy, operations strategy, current financial overview, and a forwarding looking financial review.
The business plan should spell out an action plan for future growth and operational initiatives.
What is the Benefit to Your Business?
A business plan provides two major benefits to business owners. First, it is a guide to move forward. Second, it is an important asset when looking for outside financing.
For you, if you have trouble planning and sticking to it, a business plan can help quite a bit. It can keep you focused and on track to meet your goals. There are no direct benefits to the business plan for you beyond that.
The most important use of a business plan is when seeking outside funding. If you are looking for an angel investor or venture capital funding, you need serious documentation. A business plan is the core of what you present to an investor to get them started vetting your business.
The Downsides of a Business Plan
If you don’t need outside funding, business plans may actually hold you back. They can be limiting to creativity, adapting, and changing quickly. Those are big advantages small businesses have over large ones. If you are limiting yourself to what is written on paper, you may be taking out a big competitive advantage.
Second, it takes a lot of work and time. If you are not going to use it for investors, you are only making it for yourself. Does that do anything for your actual business? Does it provide value to you or your customers? Probably not.
As a business owner, you will be faced with new challenges and tasks every day. Why waste time on something that doesn’t produce any revenue, save any money, or give value to your customers?
Should You Write a Business Plan?
In most cases, I think a business plan is a complete waste of time. Many business “experts” probably disagree with me, but many successful companies came off of an idea or something jotted down on the back of a napkin.
Elaborate business plans do have their value in the right time and place. If you are looking for investors, you will need something written down to give them. It has to be professional and concise. Otherwise, what’s the point?
Your Business Plan Experience
I’ve never written a business plan outside of school, but that’s just my experience. Have you ever written a business plan? Please share your stories in the comments.
About Carson Derrow
I’ve only ever written a business plan for schooling purposes. I would treat one as a road map. Something that is not set in stone, but a useful guide. It also would be helpful for not getting distracted. This post has me thinking about writing one for my site.
It’s essential to have a plan… Thing is – my plans always start with the paper and pen-type “operation”. I draw and write and I do this over and over and can take weeks, months. Eventually, the project takes shape!