“Do I need a business plan?”
Yes and no.
There was a time where you would go to a bank to ask for a loan for your business. They in turn would ask you for several things, including a detailed business plan. Depending on who and what kind of business you were trying to start, a business plan would go up to ten, twenty, thirty, sometimes fifty pages. Your eyes would glaze over, your hands would turn into claws as you hovered over your Oliver or Smith-Corona typewriter. PowerPoint was a T-Square, a protractor, some colors pencils and a compass that could kill a moose. You also had to find a commercial real estate broker for a space, buy office furniture, have a rotary phone installed and try not shatter the giant glass water cooler bottle while changing it, forget about trying not to spill all the water on the floor.
Today, you go sign a piece of paper at WeWork, move into a fully furnished office and they even supply the fruit infused water with no potential for glass breaking or getting your shoes wet. Same goes for a business plan. It has become a bit simpler, but you still need one.
Unless you’re planning to get a loan from a bank or any other type of financial institution, chances are that they will expect a detailed business plan. This will be how they will understand your plans to profit and subsequently pay off your loan. But if you’re planning to start your business with your own capital or through others means with less red tape, an overly detailed business plan is not necessary.
When clients come to me with an idea or even product, I ask them what’s their plan moving forward. Their usual response is, “do I need a business plan?”
I smile and give them a one page business plan template that has twelve boxes:
Company Identity
Problem
Your Solution
Target Market
The Competition
Revenue Streams
Initial Marketing Plan
Expenses
Team & Key Roles
Timeline
Future
Exit Plan
Some will need more space than others for the information, depending on the business, service or product. These basic categories will help you further understand what you are creating, its structure and its future.
With these basic blocks, you can start putting together your business model canvas and your visual presentation deck, two things that you definitely need at the outset. I will explain these in further detail in future posts.
So, no, you don’t need three reams of paper’s worth of a business plan but you do need a plan. Something clear and concise that will serve as a guide for you and your team.