I don’t know whether I’m more tired or more worried about people who should know better suggesting that you don’t do a business plan to start a business. That would be just silly if it weren’t also misleading.
It’s essentially a cheap trick to say you don’t need a business plan when what you mean is that you don’t need a formal, written, business plan document that you can show to outsiders. A business plan is a plan, and you need one, whether you have a formal document or not. A plan doesn’t have to be formal to be useful. If you don’t have to show it to anybody, don’t print it just keep it on your computer. And don’t write out the portions of a normal business plan that you already know, like, say, the description of the management team or company history. You do however what to lay out your steps to the future so you can follow them, track progress, and review what went wrong.
It’s about controlling your destiny. It’s not a document; it’s a plan.
The people I refer to are people who should know better, or, alternatively, some who just plain don’t know what they’re talking about.
For the ones who should know better, giving them the benefit of the doubt, what they really mean is that you don’t necessarily have to do a long, formal, complete business plan document to start a business. And that’s true; but not needing the formal document doesn’t mean that people shouldn’t plan. That’s just bad advice. When you ask them what they mean by not needing a plan, they don’t mean you don’t need to know what you’re going. Of course you do.
- You need to understand what you’re selling, to whom, how you reach them, what you tell them, why they buy, and where they buy.
- You need to know when you’re going to do what, which steps you’re going to take in the future, how much those steps are going to cost you.
- You need to plan your cash flow. If you’re going to be selling to businesses, they’ll pay you weeks or months later than you think. If you’re going to be buying or building products, you’ll have to buy first and sell later. That means you’re going to have to handle cash flow.
- And you always need to understand why you’re in business, what your long-term objectives are, and which steps you need to take along the way.
All of which brings me to the “need” word. Do you “need” a business plan? If you aren’t having to explain your business to yourself or your spouse or significant other or partners or potential investors or potential lenders, then perhaps you don’t need to produce the formal business plan document.
What you really need to start a business is customers. Lots of people have succeeded without creating the detail-oriented formal document that some experts confuse with a plan. Some people can keep it all in their heads, and don’t need or want to communicate it to anybody else.