While many would think it impossible to achieve any success without a well thought-out and coherent business plan, others would argue that such rigid frameworks only result in businesses being too cumbersome to react to market changes.
I look at both sides of the argument and I’d love to hear what you think.
It provides market research – The best way to work out whether your business idea will work is to see what it looks like on paper. Business plans follow a fairly routine formula for a reason – it ensures that any blinding discrepancies are spotted early on.
It establishes key milestones – As your daily to-do list grows longer than the length of your arm, a business plan reminds you of the key milestones that will decide whether your business succeeds or fails, whilst also reassuring you that you’re still on track.
It aids lending and investment – Often business need investment to move on to the next stage. Quite simply, no one will give you a penny unless you can show them exactly how it‘s going to be spent. A business plan is a crucial part of this.
It helps budgeting and cash flow – Any good businessman or woman knows that keeping a tight reign on the finances can be the difference between a good idea that flops and one that flies. Business plans help you stay in budget and outline contingencies for the tough times.
It reassures staff and investors – Staff need solid foundations and goals if they‘re going to really add value to a business. Business plans help staff to understand the company’s and their own progress, while providing assurances to investors that the project they bought into remains on track.
It stops you doing business – Business plans can be big documents that require time, effort and expertise to complete. Rather than wasting time on them, why not just get started with selling products, making deals and doing business?
It wastes time on facts and figures – Too much reliance on facts and figures can have a detrimental effect on your previously positive outlook. Just because your business hasn’t been successfully implemented already and there are no stats to draw on, doesn’t mean it won’t succeed. Uniqueness is often the secret of success.
It makes you less nimble – You may have planned every conceivable outcome in minute detail, but you can’t foresee the future. It is often the companies that are quickest to react which benefit the most from market changes. Simply sticking to your business plan could leave you lagging behind.
It can’t answer all the questions – Quite simply, you don‘t know whether you‘ll sink or swim until you jump in. Business plans can give you confidence but only when you start doing business will you know whether your idea is a success.
What do you think – are business plans essential or have you made it without one?