If you are thinking about starting a business, you might be thinking, “Do I really need a business plan?” Although a business plan is important, it’s not a guarantee for success. But, a business plan is definitely a valuable strategic tool for entrepreneurs.
Your business can succeed without a plan. It’s not a guarantee for success, only a blueprint for success. When you start a business with a plan, you will know what your next step should be. You have clearly defined your goals and the steps you must take to achieve them. Business success is created by having a plan, then acting on it. It will give you clarity, helping you move faster and with greater confidence.
It helps entrepreneurs focus on the steps required to take a business idea and turn it into a successful company. It’s just a tool for success, helping entrepreneurs achieve short-term and long-term business objectives.
I agree with Benjamin Franklin that “If you fail to plan, you are planning to fail.” So while a business plan is not a must, it should be an integral part of starting a business. Not having a business plan is one of the most common reasons businesses fail.
Do you really need a business plan to succeed in business?
I understand why at first, you wouldn’t want to write a business plan. After all, it can take a long time. But if you seek investment or want to apply for a business loan, having a business plan will help you. Of course, you can start a business without a plan, but why would you? Starting a business without a plan is like running a marathon without preparation. Wouldn’t you rather run a race after you had a chance to prepare? A business plan is exactly that, your chance to prepare to build a successful business. Having a plan will give you the edge you need for success.
Even if you don’t need a business plan, the process of writing it can help you. Writing a business plan will help you think about important aspects of your business, like your marketing strategy.
If you are a detail-oriented person, you might not need a business plan. But, on the other hand, you may be able to formulate, execute and implement your business strategy without a plan. Because, after all, business success is about transforming your business idea into a strategy to make your idea work.
Having a good business plan is critical for entrepreneurs who need to raise funds from lenders, institutional or angel investors. To increase the odds of getting funding for your venture, you should aim to have a well-documented business plan that speaks for itself. A great business plan is to the point and easy to understand.
Can you picture yourself starting a business you can be proud of?
You have a business idea. You start your business. Make lots of money. Sell your business, and live happily ever after. What will it take for you to get there? Do you ever wonder about what specific steps you need to take to succeed?
There are many ways to get ahead in the business world, steps you can take to make your business a major success.
Is writing an elaborate business plan one of the necessary steps?
Many people, especially academics, would argue that one of the steps to success is to create a business plan. If you are in college, a business plan might be the right thing as a learning tool.
How important is a business plan?
A business plan is like a road map. It helps you get from point A to point B. Many people get to their destination without Google Maps running on their phones, but it might be a more difficult road. Especially if this is your first time starting a business, you are putting yourself in a more difficult position than you need to be.
Why is a business plan important?
A business plan is vital for three critical reasons:
- The business plan helps you set goals for yourself and your business.
- Having a business plan helps you measure how your business performs.
- Investors might have more confidence in looking at your company if you have a solid business plan.
Will a business plan help you succeed as an entrepreneur?
A good business plan may help you avoid some big mistakes. When you write a business plan, you are considering various key factors such as:
- Assessing the market – You can study if there is a need for the product or service you want to offer.
- Financials – Preparing a business plan forces you to have a realistic look at money. The business plan helps you look at how much capital you will need to start and operate your business.
- Pricing – You will have to develop a competitive pricing strategy for your business if you write a business plan. It will help you understand at what price you will still be able to operate your business profitably.
- Competition – Many entrepreneurs enter markets without understanding the competition. You have to have a clear understanding of the competitive picture of the market you are entering.
- Sales and marketing – Your business can’t succeed without a sales and marketing strategy. Working on your business plan, you can develop a go-to-market strategy based on measurable goals.
There is nothing wrong with creating an elaborate business plan except that it may be largely a waste of your time. Think of a business plan as a book that is outdated on the day it was published. Your business will move too fast and change too frequently to be run by a book that you wrote way back when on how things might be sometime in the future.
Making a business plan is no guarantee of success, and there are plenty of people who make successes of themselves without one, just as there are people who make business plans and still fail.
Here are some common alternatives to using a business plan:
- Business success outline – keep it to one or two pages if you can. Don’t think of it as a business plan but as a strategy summary. It will help you stay on track, but it will not drown you in paperwork.
- Your favorite project management application – like Trello. Much of what it takes to succeed in business is staying accountable and the ability to track what happens in your business. Your favorite project or task management application will keep you on track.
- Google Calendar – To meet your goals, you must stick to deadlines. I love Google Calendar because it works great with Gmail, but you can use your favorite calendar solution.
- Spreadsheet – Use a simple Google spreadsheet to list your goals, objectives, deadlines, etc. Writing your goals down and tracking them is what separates entrepreneurs from wantrepreneurs.
The best way to succeed in business if you don’t have a plan is to stay ahead of the game and think on your feet. If you can’t think on your feet with confidence, then you’re going to have trouble in business anyway. Think on your feet, stay one step ahead of the competition, and make the business the best it can be by avoiding a plan and reacting to current events.
There are skills you can develop to think on your feet more effectively:
- Relax – We tend to tense up under pressure, but the opposite is needed. Staying relaxed enables your brain to function better.
- Listen – Don’t jump to conclusions. Observe the situation. Listening allows you to fully understand the problem at hand.
- Buy time – Sometimes, you just need to give yourself a bit more time before making a decision. Run your mind through the question at hand. Repeat the question if there is one you need to answer. It gives you time to think. Ask for clarification.
- Silence – You don’t have to talk while you are thinking about a possible solution. Get comfortable with silence. Pausing to collect your thoughts creates clarity.
The lack of a business plan helps you to avoid overthinking your challenges.
Here are ways to minimize overthinking:
- Timer – Set a time limit in minutes, not days or hours. The time limit forces you to decide without kicking the problem down the road.
- Reduce your options – The fewer options you give yourself, the easier it is to make a decision. Face it; most decisions come down to a few options, two or three. So work hard to reduce your options to three or fewer.
- Use your gut – If your final two options are very similar, go with your gut feeling.
When it comes to succeeding in business on any level you need to keep track of where you are and where you’re going.
You have to keep your emotions in check and stay on top of your business. Keep track of your cash flow and respond appropriately when it changes, and you end up with less or more money than you expect.
There are some great tools to help you keep track of your cash flow:
Freshbook – Excellent with invoicing clients. It is a simple small business accounting tool that is simple, perfect for non-accountants.
Mintbills (formerly Check) – A free app that helps you stay on top of your bills and money.
Pulse – Use this app to keep track and forecast the cash flow in your business.
Expensify – Having trouble keeping track of your expenses? Use Expensify to take the pain out of expense tracking.
The advice of people around you will be useful too, even if they advise you to get a business plan. There’s a lot of good advice out there, and it’s not hard to do a bit of research yourself. Find people who succeeded without a business plan and see what worked for them. It’s also important to keep in mind what didn’t work for them. Don’t repeat the mistakes of others.
There are several effective ways to get great business advice:
- Network – You can network in person or online. There are many ways to do it, from using Twitter to sending an old-fashioned email. The key is to reach out and make connections.
- Mindshare – Form a group of entrepreneurs or join an existing one. The combined power of your mindshare group will be much greater than that of an individual. Mindshare groups are a great way to learn about business and get moral support from your peers.
- Events – Attending events is a great way to get out of the office while building your business. You will learn new things and meet new people. Once you are out of your daily routine, you will see and think differently, and it will help you to be more creative about your business.
One major step that doesn’t involve business plans is, as mentioned before, to keep track of absolutely everything and manage your numbers properly. Respond to the way numbers work, understand your financials and your customers. There’s a lot more to numbers than just profit and cash flow. If you have fewer customers, then you have to ask yourself what’s gone wrong and respond to it to get new customers or bring back the old ones.
Any successful business has many moving parts. If you are going to be successful, it is because you have mastered what it takes to keep your eyes on the many moving parts not because you write good business plans.
Business plans can actually do a lot more harm to you than good. You do need to plan and stick to your plans, but not in a formal business school sense. As soon as your business takes off, keep track of your numbers and emotions, and you can find your way to the top without a plan.
A business plan is a strategic tool that you can use to secure investment capital from banks, angel investors or VCs. You can also use a business plan to convince people to attract customers, work for your company, secure credit from suppliers, and develop strategic partnerships.
Creating a business plan requires a lot of thought. You have to spend time thinking about what you want to do and how you are going to do it. The good news is a business plan doesn’t need to be complicated. At its core, your business plan is to identify the vision for your business and how to accomplish it.
The existence of a good business plan doesn’t guarantee business success. But, it’s a solid foundation for success, helping you attain success. Besides, even if you don’t seek outside investment, your entrepreneurial aspirations may quickly disintegrate without a blueprint.