One of the debates I hear most often revolves around the need for a Business Plan. Love them or hate them…everyone has an opinion. I’ve heard VC’s say they never do anything without one, and I’ve heard them say they are a waste of time.
My opinion? Yes. No. Absolutely. No way. Without a doubt. Maybe.
I think it all depends on what you are going to use it for. I’ve seen hundreds (and written dozens) of business plans over the years and I can’t think of one where everything went according to the plan that was so carefully written. So why bother with them? Simple. I think the highest value to be gained from putting thoughts to paper lies in helping the writer think through their models.
Top 5 Reasons to Write Them
1. Make mistakes on paper before you make them with dollars. It’s a really good exercise to really think through your business model.
2. Prove to potential investors, and to yourself, that you’ve really thought this through.
3. Ability to forecast multiple “what if” scenarios, that you are realistic in your anticipations and goals.
4. A road map to see if you are staying on task with your goals.
5. Benchmarks for investors and stakeholders.
Top 5 Reasons Not to Write Them
1. Very time consuming. A good model can take weeks or months to do the research and document properly. How will this impact your launch?
2. It could box you into only thinking one way. Starting and building a business demands you to be nimble and fast on your feet.
3. Could prevent you from taking advantage of an unforeseen opportunity. Business takes odd twists and turns and the right path for your business could be around one of them.
4. Don’t rely on it to keep you from making mistakes…perhaps the plan was not right.
5. They are an absolute pain in the neck to write.
The real answer is…there is no one clear path to building your business successfully. The right path for you will be driven by a combination of luck, timing, opportunity and expertise. Do what is right for you….what your heart tells you is the right path. At the end of the day…it’s your business to succeed or fail. And that level of control of our own destiny is what makes us entrepreneurs.
About the Author: Peter Justen is the Founder of FivePlus, a cloud based financial dashboard for small businesses (www.fiveplus.co) He is considered a subject matter expert in small business, and has been interviewed by leading publications including Forbes.com, WSJ, INC, Entrepreneur, PC Magazine, PC World, and FOX News Radio. Peter was profiled by Smart CEO Magazine as one of the “20 Leaders We Admire in Washington, D.C.”, and was singled out by the Government of Finland in their study on innovation as a “Shining example of US Innovation”.