Do you really need to write a business plan?

November 22, 2012

I have been listening to a debate going on in the business community, especially in the tech start-up area, about the validity of writing a business plan or whether you need one at all. Some people have argued that you should go straight for the market and that most of the business plan was for the investors and bankers. So do you really need a business plan?

Well, the answer really depends on who you are and your experience? If you are an experienced entrepreneur with several successful ventures under your belt then there is a good chance that you will see many of the pitfalls in advance, gained mainly from painful experience. In my experience these people are also the most sceptical about business proposals and the hardest to impress. However, if you are new to business and entrepreneurship and do not have a depth of institutionalised knowledge built up then I can give you a few good reasons why you should do a business plan:
• The business plan itself is probably not the most important thing; it is the process of learning that goes with writing the plan that is the most important. You get to pull the business idea apart in a safe zone when you write the plan and you get to ask all the awkward questions in advance
• It allows you to identify the pitfalls in advance; if you are being honest with yourself
• More importantly, it allows you to identify gaps in your knowledge. It allows you to go find the outstanding relevant information and then have a bigger picture
• For start-up ventures, doing a business plan is a feasibility test on the concept. Always a good idea to check if the idea is commercially sound before you pour good money, time and energy into it
• For existing businesses, writing a business plan is a reality check on where you are compared to where you think you are

I run ‘write your own business plan programmes’ because I genuinely believe that it is the process of writing the business plan that is the most important thing, not the finalised document. It is the process of learning and exploring that really helps an entrepreneur or manager to develop themselves and their business. I also recognise that if you get someone else to write your business plan you will get a document but you will have lost the real benefit of the exercise.

So maybe the question is not whether you need to write a business plan but, rather, do you want to find out more about your business, business model, customers and market? If the answer is no then that is probably a bad sign!


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