Do you actually need a business plan?
As entrepreneurs, we are often told that a business plan is essential. The need for these plans was even drilled into me in college courses. However, recently, there has been some debate on whether you actually need a business plan or not. We are going to explore the pros and cons of writing a business plan.
- They are long and difficult to write.
Business plans can be upwards of ten or fifteen pages. Plus, it takes a long time to do all of the research that is needed for it to be complete. I mean, couldn’t you be doing something “more productive?”
- You may not know all of the information.
When you start, an empty business plan template can be very daunting. There is a lot of research and thinking that you need to do. And frankly, you might not know all of the information. Many of your financial documents, for example, will only be projections. If it’s a guess, why bother, right?
- You may need it eventually.
If you decide to apply for a loan, either from a bank or other agency, many times they will require that you have a business plan. Since the business plan shows both actionable and financial details, it allows the bank to better assess your risk. Many entrepreneurs have said that even if they didn’t start with one, eventually they did need a business plan.
- Writing it down will make it real.
When we talked about goals, we learned that writing and planning them makes them more concrete; We are more likely to stick with it. Writing a business plan works the same way. If you write it out, you have a better chance of actually following through with your plans. Even “guessing” on your financial projections can make you take a more realistic approach to them.
- It makes you think out everything.
This is by far the best reason to create a business plan. Even if you never need to submit your business plan to someone else, writing one will make you think through everything. Do you know exactly who your competitors are and why you are better? You will after writing a business plan. Much of the information that could be glossed over will be well thought out. Plus, you will be left with a detailed plan of work.
The truth is it is entirely up to you if you need a business plan or not. Unless you are required to submit one for a loan, you do not necessarily need to write one. However, the process of actually writing the business plan is extremely beneficial. Because of this, I highly recommend writing one. When you write your business plan, you will be able to have an exact plan to follow. This will make knowing what to do next a lot easier. Plus, you have to think of a lot more details.
Either way, I know you will make the right decision of if you need a business plan. If you need help creating one, stay tuned for a series on writing a detailed, actionable business plan.