Is a Business Plan Really Necessary? 6 Reasons to Skip Making a Startup Plan

By Henry Cazalet

Startups are bombarded by helpful advice. It comes at them from all angles. There’s no shortage of experienced and battle-weary entrepreneurs willing to pass on their pearls of wisdom to an eager audience.

Much of their advice is sound and practical, built up over years of learning from their own mistakes. Tapping into these precious resources is a very sensible way of avoiding the traps and pitfalls they have fallen prey to—why make the same mistakes that someone has already made for you?

But a note of caution: Some advice continues to be trotted out with little of no thought and is often not backed up by evidence.

There’s one piece of advice that we’ve all heard before that should be dismissed immediately. It’s often one of the first pieces of advice that startup entrepreneurs hear: "You need to have a detailed business plan complete with three-year financial projections." "You need to have an in-depth product and marketing strategy and a detailed road map of company costs. "The more detailed the business plan, the better your chance of success."

This broad advice is often closely followed by one of these clichés:

• "If you fail to plan, you plan to fail."
• "A goal without a plan is just a wish."

I find this advice patronizing and infuriating for so many reasons, but here are my top six reasons why having a detailed and hefty business plan document could be the worst idea for your startup:

1. It ties your business to an inflexible, rigid document

Business plans are tied to a particular moment when they were created. They take no account of fast moving, dynamic market conditions which can make them just plain wrong almost immediately. Small misjudgments, or not being able to predict the unpredictable, can instantly write off huge swathes of your document.

You won’t actually know what to expect until you’ve launched your new business. No amount of forward planning can replace the reality of the first few months. Business plans just don’t have the flexibility to adapt to conditions as you find them.

2. Business plans suck up your time like a never-ending college dissertation

Nothing will remind you of college more than the drudgery of creating a detailed business plan. It’s easy to forget that the primary audience for the document is you. Potential investors won’t thank you, either, if you present them with a hefty document that is likely to bore them rather than excite. And it’s easy to start believing that completing your business plan gets you closer to launching your new business.

3. You’ll ignore it as soon as you’ve made your final edits

Despite the monumental, mind-numbing effort used to create them, most business plans never see the light of day. Almost as soon as you press publish on your spangly new website, the ludicrous document has become irrelevant as you come to grips with the reality of running your own business.

And once you’re open for business, it’s likely that you won’t refer to the document ever again. That’s a good thing, too, as its contents are likely to be stuffed with business jargon, charts, and tables that have no practical or discernible benefit.

4. Business plans dictate a plan of action that might be completely wrong

Having a business plan can engender a "follow at all costs" mentality, because "if it’s in the business plan, it must be right." However, just because creating an overblown business plan has nearly sucked out your life force, it doesn’t follow that you should pursue what it dictates. It can easily become a millstone that drags you around. The business plan can end up dictating to you rather than you reacting to the conditions that you find in your first weeks and months.

5. A business plan doesn’t get you closer to venture funding

Many startups toil long and hard on their business plan in the hope that it helps secure venture capital funding. Economist Carl Schramm, author of Burn the Business Plan, says less than 1% of all new businesses succeed in getting venture capital. So, evidence suggests having a business plan would appear to be a waste of time. By ditching the business plan, you’ll be in good company. None of the following organizations had a business plan before they got started: Amazon, Apple, Facebook, Microsoft, U.S. Steel, General Electric, IBM, or American Airlines.

6 They create a false sense of security

After launch, if things don’t go as planned, there can be the temptation to take comfort in the business plan which you and your colleagues so lovingly crafted. It’s understandable to use the business plan as a kind of crutch to keep you feeling positive when things aren’t going your way.

Unfortunately, just because you poured your heart and soul into it and your business plan took ages to create, it doesn’t mean it’s a helpful or meaningful piece of work. It can be painful to admit that the business plan is flawed despite the work involved, but it’s a realization that’s best made early and honestly.

But don't be reckless...

Ditching your business plan doesn’t mean that you should dive recklessly into a new venture without planning. You still have to understand your market and costs, and have created tangible benefits that would drive customers to use you.

But don’t be drawn into spending time and effort on a meticulous business plan simply because you’ve been told it’s what all startups are supposed to do. There is no right way to launch a business, and because someone’s had success using a certain approach, it doesn’t necessarily mean that you should follow their same path.

Entrepreneurs are better served by trusting their gut, listening to advice of course, but ultimately deciding for themselves what the best course of action is. By using your time and resources wisely and sticking doggedly to your goals, you’ll have a greater chance for success.

RELATED: Don’t Waste Time on a Startup Business Plan—Do These 5 Things Instead