As a new entrepreneur or start up business - do you really need a business plan to kick off?
Do you need a business plan?
Well, simply put, the answer is - No you don't actually need a business plan, many people start a business without one, but as your sales increase and the business expands you will soon realize that having one could be very helpful.
Secondly, it is always better to start with a plan, no matter how simple it is, start with something, a plan will keep you focused and enable you to deploy your scarce resources in the best possible way. Many business owners who say they don't have a plan, actually do, but it is usually in their heads! I advise that you write yours down and share it with your team. That way everyone is focused and on the same page.
So here are some reasons why starting with a plan is a good idea.
Why You Should Write a Business Plan
1. Clarity and Direction
A business plan acts as a roadmap for your venture. It helps you clarify your business idea, define your target market, and outline your goals and strategies. This clarity is important for staying focused and making informed decisions as you grow. Additionally, a well-crafted plan will provide you with a framework for allocating your scarce resources efficiently, ensuring that every aspect of your business is aligned with your overall objectives.
2. Securing Funding
Investors and lenders often require a detailed business plan to evaluate the feasibility of your venture. Your plan will include a financial budget outlining what your revenue and cost expectations are. A well-crafted plan shows your commitment and understanding of the market, increasing your chances of securing financial support, either from angel investors or a bank loan.
3. Identifying Challenges and Threats
Creating a business plan will force you to think critically about potential challenges, threats, and risks. If you are able to identify these early on, you can develop strategies to address or mitigate them, which will improve your chances of success. Being proactive will allow you to anticipate obstacles and plan for alternative solutions. Additionally, understanding risks in advance will help you allocate resources more effectively, so that you are prepared for any eventuality. Ultimately, being aware of potential pitfalls and having a plan in place will make your business more resilient and adaptable in a constantly changing market.
4. Measuring Progress
Your business plan should include some key milestones and success metrics. By regularly reviewing your plan, you can measure progress, make necessary adjustments, and stay aligned with your long-term goals. This ongoing evaluation will enable you to stay on track to meet your goals and allow you to respond to changes in the market or business environment. Additionally, setting clear benchmarks will help motivate your team and provide a sense of accomplishment as you reach each milestone. Consistent monitoring and refinement of your strategies will keep your business agile and focused, paving the way for sustained growth and success.
The Case for Flexibility
1. Adapting to Change
The business landscape is dynamic, and rigid plans can sometimes hinder adaptability. As a startup you may need to pivot based on market feedback, and a flexible approach will allow you adjust quickly to changing circumstances.
2. Lean Startup Methodology
The Lean Startup methodology emphasizes building a minimum viable product (MVP) and iterating based on customer feedback. This approach prioritizes learning and adaptability over detailed planning, making it suitable for certain types of businesses. I will cover this in more detail in another post.
3. Focus on Execution
Some entrepreneurs argue that spending too much time on planning can delay execution. For certain ventures, taking action, testing ideas, and learning from real-world experience can be more valuable than extensive planning, so you need to strike a healthy balance. Depending on the type and size of the business you want to start, keep your plan as simple and practical as possible.
Don't get lost in fancy PowerPoint presentations that look pretty but fall short when it comes to execution. Focus on getting things done, not perfection. Your first product or service will not be perfect but work towards making it sufficiently usable or consumable enough for your customers to exchange value for money. Adopt an agile approach and improve as you go along.
4. Finding the Balance
So, do you need a business plan to start a business? The answer depends on your specific situation and the nature of your venture. Here are a few other considerations:
Nature of Business: Highly regulated industries or businesses requiring significant investment may benefit more from a detailed plan.
Experience Level: First-time entrepreneurs might find value in the structured approach a business plan provides.
Market Dynamics: Fast-paced or highly innovative industries may require a more flexible, iterative approach and therefore a simple business model canvas or bootstrapping approach may be more appropriate.
Where and How to Write a Business Plan.
So, you have decided to write a plan, the next question is how? What should you include? I will cover this in detail in another blog post but here is a high-level summary of your business plan will typically include;
Executive summary - this is the summary or overview of your entire plan
Business goals and objectives - what is the goal of the business, what do you aim to achieve? The vision, mission, core values?
Business analysis - external, internal and industry analysis, market research you have carried out and a clear definition of the problem.
Products and services - the problem you are trying to solve, your target market, your products and services, your unique selling proposition, your pricing strategy.
Marketing and sales - your marketing strategy, sales strategy advertising and route to market plan.
Operations plan - location, equipment, suppliers, production process etc. How will the operations side of the business run?
Management and human resources - here you will highlight the members of your management team and their roles, and any other staffing needs you may have. You should also include details of the advisory board if you have one.
Financials - This section highlights your startup costs, funding requirements, revenue projections and other cost expectations. Include your profit and loss forecast over a 3-to-5-year horizon.
Milestones and metrics - How will you measure your success? What are the major milestones, e.g. launch date, first sale, reaching a certain number of customers, etc.
Appendix - Supporting documents, any other supporting information and documentation can come here.
Finally, a mention about HOW to write your plan. Well, there are free resources and templates to do this everywhere, and the format you can use is also flexible. Canva offers a lot of free and paid templates to help you prepare your plan, and you can use presentations or text documents. There are also a lot of free templates online, just search for them.
Ultimately, whether you choose a traditional business plan or a more flexible approach, the key is to have a clear vision, stay adaptable, and remain focused on execution.
So, will you be writing a business plan for your startup?
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Written by Lady Shayo Imologome FSM, FCA, MBA
Corporate Coach, Management Consultant, and Keynote Speaker
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