Business Plans are Dead! Long Live Business Plans!
Tips for bringing your business plan into the 21st centuryBY MEGAN MAHAN
So you're thinking about starting your own business. Perhaps you want to be your own boss, or maybe you just know you could do it better. Either way, you've got to start, well…at the beginning. And that means writing a business plan, right? Maybe not.
Popular business blogger, author and venture capitalist Guy Kawasaki has questioned the necessity of business plans, invoking this truism: "A great plan won't make a lousy idea successful, and a lousy plan won't necessarily stop a great idea."
Additionally, Kawasaki noted a 2006 Babson College study that brings some empirical force to the notion that business plans aren't a predictor of business success. Here is the abstract from the study:
This study examined whether writing a business plan before launching a new venture affects the subsequent performance of the venture. The data set comprised new ventures started by Babson College alums who graduated between 1985 and 2003. The analysis revealed that there was no difference between the performance of new businesses launched with or without written business plans. The findings suggest that unless a would-be entrepreneur needs to raise substantial startup capital from institutional investors or business angels, there is no compelling reason to write a detailed business plan before opening a new business.
There may be some legs to the "just do it" methodology of staring your new business, in that forgoing a business plan can keep you from obsessing (read: procrastinating) over the process. And besides, you know what they say about best laid plans.
Nonetheless, there are a bundle of things to consider when starting a new business, and if you're seeking business loans or capital from an investment group, you can bet that they'll want to see your plan of action.
Kawasaki gives new entrepreneurs a few tips for bringing your business plan into the 21st century:
- Keep the plan short: 10-20 pages
- Spend no more than two weeks writing it
- Don't become too obsessed with financial forecasts (limit this portion to one page)
- Use the business plan as an exercise to get your team motivated and on the same page
Need a bit of prodding to get started? New web applications help you with the hardest part of a business plan: the start.
PlanHQ (link) is a fairly new web application that helps you:
- Create a dynamic business plan (because, you know, items may shift during the flight)
- Identify target markets and competitors
- Track your financials
- See what events and action items are coming down the pike
- Collaborate with teammates
- Leave notes
- Customize your business plan to match your branded documents
The laborious act of creating a business plan is long gone. The modern day business plan helps you organize your upcoming endeavors, motivate your team, and keep you agile in both business and life.
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