Do I Need A Business Plan?
Business plans are very useful, but do you need one? With many things getting faster and faster including setting up a business some entrepreneurs both old and new find the whole process of a business plan to be a bit of a slog. But does that mean you shouldn’t bother with one?
Opinion is pretty split while many people do agree that business plans are very useful it can’t be denied that they are very time-consuming. The length and complexity of formal business plans as led to the rise of shorter, simpler versions.
So, while planning your business is very important (in fact it’s critical) does the old-fashioned formal business plan still have a place in today’s more rapidly involved business world? I’d argue that it does but that doesn’t mean your business needs one.
There are a lot of variables you really need to consider, if your business is in a more complex field like technology then a formal business plan would seem like a very valuable asset. However, if you are only building a small business in a less complicated field then a business plan might not be needed right?
Well, that’s for you to decide but before you make your decision let’s take a look at the pros and cons in more detail.
The Advantages of A Business Plan
Business plans come in many forms but the one you’ll most commonly see is the traditional formal business plan, these documents are very long and complex. But while they are time-consuming to create they do offer businesses many advantages. Let’s take a look at some of them in more detail.
It’s A Valuable Strategic Tool
A plan is always going to come in useful, there’s a reason why people usually plan something out before they do it isn’t there? And when you consider how complex building a business is a business plan just seems like common sense doesn’t it?
With a formal business plan, you’ll be able to better plan out your businesses strategy and you’ll always have something to refer back to. Many start-ups struggle when it comes to building an effective business strategy and formal plan can be a big help.
You’ll Learn More About Your Market
Marketing is the key to success especially for start-ups and a formal business plan will help give you an insight into your main demographics before you have even started setting up your business. Of course, you’ll still have to ensure you work on your marketing, but a formal business plan will be sure to help give you a head start.
It’s Great For More Complex Industries
One of the main perks of a business plan is that it gives you a guide to your day to day operations this includes a detailed outline of who is responsible for what, the director’s details, your business structure and much more.
While this is undoubtedly useful for any business it can’t be denied that businesses in more complex industries like technology will find it more useful. Having a way to more quickly check your business strategy and see who is responsible for what will be very helpful in more complicated and competitive industries.
It Helps With Legal Issues
A start-up business will be tasked with a lot of legal issues when setting themselves up and a formal business plan will help you ensure all the legal issues are dealt with. And according to Jones Whyte who are not only trusted conveyancing solicitors but also work with many local startups, forgetting even a small step could cause big problems down the line and with a formal business plan you can keep track of everything you need to do to set-up your business.
The Disadvantages of A Business Plan
So, now we’ve taken a look at the advantages let’s look at the flip side of the coin and see why some people think writing a business plan is a waste of time.
They Are Time Consuming
One of the drawbacks of a formal business plan is that they are very time consuming to create sometimes they can even take months to draw up. You could create your business plan alongside setting up your business of course, but it will add more to your workload. However, some entrepreneurs have set-up a business later one once their business as already been established to help guide them.
It Can Stifle Growth
In a rather ironic twist of fate, some entrepreneurs have found business plans to be very stifling, rather than help nurture growth you and your partners might feel like you have no flexibility because of your business plan.
There’s also the risk that having a business plan could make you a little too rigid, after all, isn’t it important that entrepreneurs know how to act fast? It is, and this is especially true in the early days of your business’s operation.
Getting too caught up in your business plan is a real issue and one every entrepreneur should be aware of. In certain industries like technology, for example, acting fast and knowing when to take a risk can pay off so you don’t want to risk a business plan making you to inflexible.
They Might Not Really Be Needed Yet
The above statement really goes against everything you might have heard about a business plan, but it’s true that you might not really need a business plan just yet. The yet is the key part of that sentence because you will likely need some form of plan eventually.
But if you have a good idea of what you want your business to do then why write a plan? You could simply create a small document or PowerPoint instead to act as a guide and then build a more detailed plane once your business is established.
So, Do I Need A Business Plan?
It can’t be denied that there are a number of benefits to having a business plan it can help guide your business and will be useful for dealing with those notoriously tricky legal issues. However, a traditional formal business plan can usually wait unless you have the time to properly commit to writing it. I would advise having some form of a business plan, but you can usually wait till your business is more established and developed till you tackle the big formal one.