Business Plans Are Stupid & Why You Have to Do One Anyway
“Business plans are a waste of time” “The most successful companies didn’t write a business plan. Why should I?”
“People never build what they say they are going to in their business plan.”
There are a lot of people who will tell you that you should not write a business plan. They have a range of reasons why it does not help and you should “just do it” and get to working on your business idea. I think their reasoning is valid but it might be flawed.
Business plans are a waste of time because they can take months away from starting the business.
Spending months or longer writing a business plan is absolutely a waste of your time. If you are spending months creating a long document before you even start working on your business you are wasting time. You should be researching, planning and building at the same time. It is an iterative process. First try to get an understanding of the most important parts of your business. You probably have assumptions about them. Go do your research and test them.
For example, you want to create a mobile app and because you’ve heard people say that it’s super cheap you think that you can outsource all of your development to Eastern Europe? Go find at least three people who have done it and talk to them. Find out about their experiences and see if that will actually work for your business.
Google, Facebook and other successful companies did not write a business plan at first.
Ok, I’ll buy it that Facebook and Google didn’t write a business plan at first. But they were both started by college students who were just playing around for years. They got lucky and what they were playing around with had potential. Once they started to get some traction they had to write business plans. Also, note that they both had investors. Investors don’t invest without a business plan.
If you have a hobby and work on something for fun that turns into a business, good for you. But don't expect that this your hobby will morph into a profitable business.
Many times people write a business plan for one business and then end up building another business. So to avoid spending time doing something that you are going to trash anyway, just don’t do it.
People don’t always end up building what they wrote in their business plan. That is really more of a reason to write a plan than not to, isn’t it? I mean what if they just started building the business instead of writing the plan and then decided that they didn’t want to move forward that would be a waste of time AND money. Or even worse, without spending the time to create a business plan they may not have realized a major flaw in their business and started to build a business that would have never worked out but they could have avoided wasting time.
I think what most people are referring to are those really long academic plans written in Word that look like something an MBA student wrote. For everyday purposes, I do not support creating a lengthy, time-consuming document.
But let’s actually dissect it. What is a business plan exactly? It is you doing research to help you plan to build a successful business.
Hmmm...that doesn’t sound so bad. Planning is good. I mean, you wouldn’t show up to a client meeting without planning for the meeting, would you?
Why would you try to start your own business without taking the time to research and plan?
I wish there was a short cut to building a business. If you find a sure fire way to build a business without planning for it, please let me know. But for now, we know that there is nothing that wastes more time than not planning.
I do agree to some extent that a business plan can be useless. If you don’t focus on the correct areas, get bogged down with minutiae or spend months researching and planning with no action. To make the best use of your time and energy in starting your own business you need to educate yourself.
Taking the time to deeply understand the product or service that you want to sell, other products and services that are currently available, the people who are going to buy it, how to get people to buy, and how much money you can make are all fundamental.
Without doing your research you are just playing a guessing game. There are plenty of things in life that we do not know what is going to happen, but in business you can reduce your risks by creating a business plan. But not just once. Make it a living document. You should always be planning for your business.
But don’t create a business plan because I said so. Create it because it will really help you and these two reasons are the proof:
1 Entrepreneurs who create a business plan are TWICE as likely to succeed.
A survey of entrepreneurs found that writing a business plan increased success of achieving goals including: getting a loan, making a large purchase, recruiting a new team member, thinking more strategically and growing the company. Every business, no matter the stage, should have at least one of those goals as their goals.
2 Planning can help you grow 30% faster.
A study found that it is true that a lot of businesses can be successful without planning, but businesses with a plan grew way faster and were more successful than those that didn’t plan. It's just that simple.
Now, get to planning your business.