Neil Patel recently wrote a blog post on “Why Entrepreneurs Shouldn’t Write Business Plans” that Wes Scripps from Forlio Designs tweeted about on twitter (@forlio). It is a good post, you should read it.
Wes asked me, “do you think you need to write a business plan?” My reply is “Yes!” But, I do not think you need to write a profound tome explaining in detail how the future of your business will unfold. The shorter the better. If your business does not make sense within a simple, short description, then you probably don’t have a very strong business proposition.
In this case, it is the journey that is of value, not the destination. A business plan is important because it requires a you to go through a process of looking at exactly what you what to do, for whom and for how much. A business plan demonstrates that you have thought through the market, your customers, your products and services and exactly how you want to execute this concept. You know that the market demands what you want to offer and that you know how to supply the need. Most importantly, you know that you’ve written it all down, made it a firm goal and a real commitment.
Many of Neil’s points in the above blog post are accurate. Sometimes all you need is a good PowerPoint presentation and an executive summary to get funding (although not for the SBA). Your business will constantly evolve and change. You MUST react and be proactive. I think this means going back through the fundamental questions you’ve addressed in your business plan and make sure your new ideas are still relevant. Is your new product valuable to your target customer or are you drifting towards other markets? Are you improving or just doing more of the same? Be strategic. Be conscious in your choices. Don’t re-write your business plan every time you try something new, but use the business planning process as a template for reviewing every new initiative:
What is happening in the market?
What are my competitors’ doing?
Who is my target customer and how many do I hope to reach?
What are my product(s) / service(s)?
- How does my company serve our customers?
- How is our new offering better? Different?
What kind of sales numbers do I think I can generate?
How exactly are we going to deliver on our objectives?
When I do a quick crunch of the numbers, do they make sense? Am I missing anything?
How much cash do I need to do this?
If you have never written a business plan, you must write one to understand the process. It is not a simple straight forward endeavor. The process will make you enthusiastic one moment, and then overwhelmed the next. In the end, you feel that you have looked comprehensively at what you want to do and believe in your vision for how it will work. That is powerful! And a tool you will use over and over again as you adapt, change, grow and evolve your business.