Yes, you really need a business plan. Ideas are essentially worthless until they have a company built on top of them. They are like an idea for a novel or an idea for a movie. People buy the finished product, not the idea. So you need a business to capitalize on the idea, and you need a plan to start the business.
Here are some hard realities about business ideas:
- You can’t own an idea. You can protect inventions with patents and artistic work with copyrights, so people can own patents and copyrights. But there is no legal ownership of an idea.
- Real businesses don’t trade on ideas. Many professional investors won’t sign your nondisclosure documents because the person with the next appointment might have the same idea. Besides, they don’t want business ideas; they want businesses that can implement ideas. A large manufacturer might not sign your NDA because its development team could be working on the same idea, and they don’t want to limit their options.
- The real value of anything in a business is what you can sell it for, and you can’t really sell an idea. Many people seem to think they can generate a business idea or a product idea and sell that to a larger company that has the resources to make money with it. That just doesn’t happen.
- If it’s a good idea, it’s already out there. Somebody else is already working on it. Business ideas are like that. When Steve Jobs and Steve Wozniak started Apple Computer, there were already two personal computer manufacturing companies in existence and others struggling to start. The idea was obvious. When Jeff Bezos started Amazon.com, there were hundreds, maybe thousands of others with the same idea.
So if you have a great business idea, you have to make it happen. That is what your business plan is about. The value in the idea comes from implementing it, getting a team together to manage it, making the required investment, and getting started. That should be the focus of your plan. That is what Jobs and Wozniak did with Apple Computer — they found investors, hired the team, and launched the business. That is what Jeff Bezos did with Amazon. That’s what you have to do with your idea. Make it happen.
Your business plan helps you focus on simple fundamentals like showing up every day, returning phone calls, and offering value to customers. Business plans for most companies are for laying out the steps; focusing the growth and development; and setting specific milestones for business activities, sales, profits, and cash. The plan has to focus on the fundamentals, not the idea.
Where does the idea go in the plan? When you are developing a business plan for an idea-based new business, the idea is in all the nuts and bolts. It increases your market potential, it is the reason your product exists, it increases your sales, and it lowers your costs. The idea is in every single chapter of your plan because it influences the company: what it sells, its market, its strategy, its management team, and its financial projections.