Business plans are a necessary “evil” for any startup. The process of creating one yourself can be daunting, time-consuming, and frustrating. But, the end result is a document that can be used to secure funding, attract investors, and provide guidance for your business. So, is a business plan worth the time and effort?
Some questions you may be asking yourself:
- Why do some prospective business owners refuse to plan?
- Can a business succeed without a business plan?
- Are entrepreneurs without business plan successful?
- Why business plan is needed?
In most cases, the answer is yes. This is because a business plan forces you to think critically about all aspects of your business, from your services or products to your target market and competition. It also forces you to consider your business finances, marketing strategy, and operations plan. Creating a comprehensive business plan gives you an advantage when it comes time to launch your business. And according to Harvard Business Review, business plan statistics say you’re more likely to follow through on starting your business if you write a business plan.
That being said, there are some exceptions to most rules. For example, if you’re confident in your business idea and don’t need outside funding, you may be able to skip the business plan altogether. However, in this case, it’s still a good idea to create some sort of roadmap for your business to stay on track as you grow.
If you decide to create a business plan, there are a few key things to remember:
- Don’t get bogged down in the details. A business plan shouldn’t be a static document; you can continually update it as your business grows and changes.
- Start with only the most relevant areas of your business, such as your value proposition and target market.
- Don’t be afraid to ask for help. There are tons of resources available to aid you in coming up with a great business plan.
The Benefits of Creating a Business Plan
There are some definite advantages to creating a business plan, even if the process is a bit grueling. Fortunately, you can do much of the work before launching your business. Then, it only needs to be updated as conditions change.
Helps Secure Outside Funding
First and foremost, a well-crafted business plan is vital if you are seeking investment or capital from lenders. This is your best chance at making a positive first impression and convincing potential investors that your business is worth their time. Investors need to know you have a clear vision for your business, understand the market you’re entering, and have a solid growth plan. In addition, a business plan gives investors the confidence that you’re committed to making your business a success.
Most investors want to see a copy of your business plan before investing in your company. A solid business plan conveys that you’ve thought through every aspect of your business and are serious about turning it into a profitable venture.
Provides Valuable Insight
Even if you don’t seek outside investment, completing a business plan can give you a clearer idea about the direction you should go in. It forces you to clearly define every aspect of your business. What are your long-term goals? How will you achieve them? What challenges do you anticipate facing? Asking yourself tough questions like these can help you avoid some common startup mistakes.
So many times, businesses fail because they don’t take the time to truly understand their customers and what they want or need. A well-researched business plan will give you a deeper understanding of your target market and help you decide what you need to do to appeal to them.
Offers a Roadmap for Your Business
Have you heard the classic saying, “If you don’t know where you’re going, any road will take you there,” from Lewis Carroll’s book, Alice in Wonderland? Well, it’s especially true for businesses – they need direction, or else they go nowhere! Without a plan, it’s easy to get off track and start working on things that aren’t really benefiting your business.
A business plan provides a map for your business to stay focused and achieve goals. It helps you flesh out your business idea, determine the costs of launching and operating your business, and keep you on target as you grow. While creating a business plan may seem overwhelming initially, it’s certainly worth the effort to know that you’re on the right track.
Serves as a Reference Point
When you’re trying to find an answer to the question “is a business plan worth the time and effort?”, you have to consider that a business plan will serve as a reference in critical moments. Once your business is off and running, you’ll inevitably face tough decisions. That’s when having a business plan comes in handy – you can refer back to it to help you when it comes time to make critical decisions. For example, if you’re considering expanding your product line or launching a new marketing campaign, you can consult your business plan to see if these new initiatives align with your overall goals.
A business plan serves as an invaluable tool that helps you make intelligent decisions regarding your business. It’s also a great way to track your progress and keep yourself accountable. If you find that you’re veering off course, you can always go back and make adjustments to ensure you’re only moving forward.
The Drawbacks of Creating a Business Plan
Again, you’re wondering is a business plan worth the time and effort? Of course, there are also drawbacks to creating a business plan. The most obvious one is that the process can be incredibly time-consuming. If you’re not careful, it’s easy to spend weeks (or even months) on your business plan without making any progress on actually starting your business.
Plans Need To Be Updated
Another downside is that business plans are often static, in a sense. They don’t change unless you take the time to update them. This isn’t necessarily a bad thing, but it means they can quickly become outdated. And if your business plan doesn’t accurately reflect your current situation, it won’t benefit you as much.
As your business (hopefully) grows and evolves, you’ll need to continually update your business plan to reflect these changes. Otherwise, you’ll risk making decisions that are based on outdated information.
Expensive if You Outsource
If you decide to hire someone to help you create your business plan, prepare to pay up. Prices for this service can range anywhere from a couple of hundred dollars to several thousand, depending on the complexity of your business and the level of experience of the person you hire.
Now, you don’t need to hire someone to create a business plan for you. As mentioned, there are plenty of resources out there that can help you do it yourself. But for those who don’t have the time or patience, hiring someone to help you is definitely an option.
Balancing Core Values and Innovation
Some believe drawing up a business plan can make your business feel inflexible. Because once you’ve put all those hours into writing out your goals, it can be tough to pivot when things don’t go as expected. Of course, every business needs to be adaptable to survive, but too much flexibility can also be detrimental. Ideally, you’ll want to negotiate a balance between being open to new ideas and sticking to your core vision.
If you’re too flexible, you may veer off course and lose sight of what you’re trying to achieve. But, on the other hand, you’ll most likely miss out on opportunities to improve your business by being too inflexible. The trick is to position yourself somewhere between the two.
Traditional Business Plans Are Big
Did you know that the average business plan is 25-30 pages long? That’s a lot of text! A business plan can quickly become a huge, intimidating document your business may not even need. This can make it challenging to actually sit down and write. Because of this, some people simply aren’t comfortable with the structure and format of a traditional business plan.
If you find this is the case, other options are available, such as lean business planning or a one-page business plan. These alternatives can be just as effective as a more traditional business plan without being quite as daunting.
It Doesn’t Guarantee Success
Sadly, there’s no guarantee of anything in the business world. Just because you put your heart and soul into creating the perfect business plan doesn’t mean your business will automatically be successful. It’s a helpful tool but only one piece of the puzzle. You’ll also need a great product, a strong marketing strategy, and dedication to making your business thrive.
Many factors contribute to a business’s success or failure, and even the best-laid plans can go awry. For example, companies can be affected by external factors such as the economy or changes in consumer demand. So while a plan can provide helpful guidance, it doesn’t guarantee anything – no matter how detailed.
The Bottom Line
So is a business plan worth the time and effort? Ultimately, it depends on your individual circumstances. If you’re seeking outside investment, the answer is probably yes – you’ll need a solid business plan to persuade potential investors to give you their money.
However, developing a comprehensive plan may not be necessary if you’re not looking for funding and are confident in your ability to start and grow your business without guidance. You know your business best, so use that knowledge to make the right decision for you.
