Before the Business Plan. Is a Business Plan the Best First Step?
Is a formal business plan the best way to start your business? If the idea of putting together a business plan prevents you from starting, perhaps a business plan isn’t the best first step. In this article, we’ll explore some of the key considerations.
1. Who are business plans for?
Business plans are for the business and leadership, but there is also an external audience that business plans are designed for and constructed to speak to. Oftentimes, the external audience is the primary consideration when researching and writing a business plan. Examples of external stakeholders include potential investors, partners, and banks.
Business plans are often best-case scenarios based on researching addition to the optimistic and often best-case planning around the trajectory of the company and its path to sustainability, and ultimately, profitability. They are designed not just to be informative, but oftentimes persuasive as well.
Consider your audience. If you need investors or a loan to start your business, perhaps a business plan is necessary right out of the gate. If not, put together a plan for your internal audience; yourself, and anyone that’s helping to start the business. Consider the key parts of the business model, and how you will begin operating. You’ll need to make assumptions, but the key is to start. Assumptions may be the best tool you have in taking your initial steps into the marketplace.
2. What do business plans include?
Business plans include projections, the vision on the company, yearly objectives, a summary of the market and competitors, and an analysis of the landscape they will be operating in. Business plans can also take a deep dive into the processes of the business and operational components that will show how the business will scale.
3. How can business plans be a detriment to the start of a business?
In some cases, business plans prevent people from starting their business. Business plans require weeks of research, thoughtful planning, and sculpting models to tell a favorable story. Sometimes ‘paralysis by analysis’ can be a challenge and major detriment and prevent would-be entrepreneurs from starting to explore their idea.
However, many businesses simply just start. People have ideas, so they begin creating value for people in exchange for money. From there systems are honed in, costs are driven down, and sales increase, all without a business plan. It won’t be maximally efficient, to begin with, but no business is, regardless of the hours of planning that go into creating the perfect, on-paper plan.
The importance of starting cannot be overstated. Bringing your idea to the people and testing, getting feedback will lead to changes in your business model whether it’s your channel selection, price, or the value proposition itself. From there, when you put together a formal business plan, it will be far more informed and accurate.
4. If a business plan isn’t the first step, what is?
Business plans have value and their place in the process of starting a business. It does not, however, have to be the first step. The more you know about your business ahead of putting together an official business plan, the more realistic and accurate it will be. Additionally, when it comes time to talk with someone about your business, and reference your business plan, the more uniquely qualified you are to talk about where you are, and where you have been. In addition to a polished plan, you’ll be able to use “in our experience” to bring instant credibility to the concepts and projections outlined in your business plan.
5. Are business plans for everyone?
We would argue that eventually, yes. Business plans are for everyone. However, business plans may not be for everyone at every stage. As mentioned above, if a business plan prevents you from starting, it actually acts as a detriment. You don’t need a business plan to start. The perfect plan has no meaning if the business never starts.
We would, however, recommend careful consideration and planning so that your first movements in your marketplace are as successful as they can be. They won’t be perfect, but that’s where the learning happens!
6. A plan before the plan.
Plan to start. Use what you know of your idea today to begin building. Consider your reasons for starting the business and who you want to help. Whose lives do you want to make better with your product or service?
Begin constructing your business model. How will you create value? Who will it best serve? How will you deliver it? What will be required of you in the first months of operation? These are all important considerations.
From there, try to outline what you expect to achieve in the first six to twelve months. Set stretch, but realistic expectations for yourself and the business. Consider how you will measure success. If you do, in fact, start you’ll be further along than most businesses ever make it.
With the elements of a solid business model and what you hope to achieve, you can then begin creating specific projects with specific timelines for yourself. By doing the front-end leg work in constructing what you want your business to look like and operate as your projects will be honed to the needs as you know them to be today.
If you would like a tool to help you plan ahead of a business plan, you might consider Business LAUNCH Workbook from Telescope Mapping.