Small business plans are a common thread of any small business startup. Nothing happens without the plan, right? The business publications and college professors say you need that written plan, so it must be true.
Not so fast.
The simple fact is that there are more people working on their plans instead of just making it happen. Why? Because we’ve always been told it’s a rule that you have to have a plan. That’s what “they” tell you.
So people who want to start a business get tied into believing nothing can be done without that plan. What happens is they never get past it and, too often, give up before ever starting.
Small business plans are not meant to be a procrastination tool.
Don’t get me wrong. You need direction. You have to know where you’re heading before you decide to jump right in and start your small business.
As Yogi Berra said, you’ve got to be very careful if you don’t know where you’re going — because you might not get there.
But I’ve heard from way too many people who are “working on the plan” for months.
Small business plans being “over-emphasized” was a little more solidified in my mind a couple of years ago when I read an issue of Inc Magazine.
It was the annual “Inc. 500” — Inc. magazine’s coverage of the top 500 privately owned companies in America (Oct 15, 2002). Sixty percent of the CEO’s they interviewed said that they either started their business without a formal business plan or abandoned their plan part-way through the start-up phase!
Wow. Sixty percent! What would my old college professor say? (Yeah, the one who never owned a business.)
There are different reasons for this.
First, the world is changing so quickly. Faster than ever. And that means every second spent planning — and not actually doing — can often force you to “miss the boat.”
Also, if you’re bootstrapping and don’t need to tap an outside source for cash, a formal plan is much less important.
However, even if you do not need a loan or start-up capital, a business plan in some way (even if you scratch it on a pad) can be very helpful in organizing your thoughts and keeping you on a specific path.
I like business plans and think they’re useful. But not to the extent that some “experts” would have you believe.
But at some point, you very well may break out of the plan and make a move in a different direction. That’s why spending months on a plan doesn’t always make too much sense.
There are still good reasons why formal plans are necessary.
Business plans can always help you collect your thoughts. It can help you learn as you research the information going into the plan. A business plan also forces you to think. And by filling in the blanks on a real plan, you find answers to some questions you never thought to ask.
Who is your target customer? How are you going to market your business? Just a couple of the important questions you’ll have to answer.
Obviously, if you’re looking to borrow money or even trying to get capital with the help of the Small Business Administration, a business plan is a must. There’s no way around it. If that’s the case, you need to understand the basics of a small business plan.