It might seem trendy to ‘just do it’ but it is pretty difficult to make sure that you are ‘doing’ the right things if little forethought has gone into what is critical for your company’s success. There are those who propose skipping this step, calling it a waste of time. The reasons given are that as soon as the plan is ready it is already out of date or “we know what we need to do already”. Many of these views come about from a misconception of what a business plan really is and what it can do.
A business plan is…
A good business plan gives founders the opportunity to clearly state and communicate their vision of the company with the rest of the team, investors, key opinion leaders and other VIP’s that are critical to the success of the company. The founder, his senior team and trusted advisors will be able to use the exercise of preparing a solid business plan to simulate how the proposed company will ultimately achieve success. Think of it as a dry-run. Gaps in the business model, feasibility issues with the underlying technology, manufacturing scale-up issues and other key elements that are critical for success will easily be uncovered during this effort. Since this is essentially a simulation of how you envision things to go, any gaps and pitfalls can be identified early before any time, effort or money is wasted. In addition to this, the business plan will allow the senior team to get valuable feedback from outside industry experts that will have a direct bearing on the company.
A business plan is not…
Having a clear understanding of what does not constitute a good business plan will not only help you in the preparation of the right plan for your organization but allow you to avoid wasting time.
- Needed only to attract investors: Yes, it is true that most investors will insist on reviewing your business plan (often they only read the executive summary) before deciding whether they have any interest in a further relationship (never mind making an investment). However, the real value here is that you will have a detailed strategy mapped out to guide your progress and even a detailed task list for the team.
- A long, boring document for ‘business types’: Nobody wants to read or review anything that is boring or valueless. If you can cover all of the essentials of your business in 5 pages then that is how long your plan will be. In fact, it is better to start with a shorter plan in the beginning and then amend it as you make progress and learn more about the things that are most important for your success.
- A static document: The preparation of a business plan it not something that you complete and then file away for posterity. It should be a living document that changes as your company grows and as market conditions that impact it are uncovered. The key here is that with a good plan in place, you and the team will make conscious decisions to make a change rather than just changing course every time something new comes along. A business without an ‘Evolving Business Plan’ is doomed to run out of time and money by constantly chasing issues that really should be ignored.
- Something that can be outsourced: Some of the hard work here can be defrayed by hiring an experienced consultant. The founder and the senior leadership team will need to work closely with this ‘hired gun’ to make sure that the final product is a business plan that will drive the success of the company rather than a generic business plan (a true waste of time and money) that has little to do with the particulars of your company.
Spending your time creating the world’s best business plan is a waste of time and money
You don’t need the world’s best business plan. You need the business plan that will provide you with the details and guidance to chart your company’s path to growth and success. It should be no longer than that and it need not be fancy looking or printed on heavy bond, acid-free paper. Spend the quality time you need with your leadership team (and consultant if needed) to draft up the best plan you can in a week or less. You will need to keep updating it and filling gaps but get at least a reasonable one in place early. The leadership team will frequently make changes to it as progress is made and new findings are uncovered. Someone with expertise in creating effective business plans can be a great asset to your team in terms of creating a version of it that will be most appealing to potential investors in your market.
Take Home Points:
You need a right-sized plan to help you avoid wasting time and money and…
- Avoid creating a great product that does not have a ready market
- Discover that a huge need in the marketplace does not have a viable business model for growing a profitable company
- Identify what the next most important tasks are
- Reveal underlying risks and opportunities that may not be obvious at first
- Business Plans and Marketing Strategy | An excellent and detailed guide for preparing business plans – businessballs.com
- Quick Business Plan or Operational Plan Template | This is especially useful if you are starting from scratch – businessballs.com