Business Plans: Absolute Must or Hindrance?
Ah, the business plan. Ask any founder what their opinion is of the document and you will receive myriad answers, from “they’re a waste of time” to “needed right from the start!”
The business plan, at its base, is a roadmap; a document with the sole purpose of providing to management, potential partners and financiers clarity at who you are, what you’ve done, are currently doing, and setting out to accomplish.
The BDC goes further to explain that “[a] properly formulated plan can help you gain the confidence of lenders, investors and other stakeholders. As such, it should show you’re committed to your business and have the skills, knowledge and confidence to achieve your goals.”
But what if your idea is clear to you and you’re set to take off and hit the road running? You’ve started building your business with your own funds, have clients and cash-flow and no real need for a roadmap because, hey, you know where you’re going and how to get there. The lean startup model worked for you.
Planners vs Doers
Some entrepreneurs have a knack for getting things done. They have a clear vision, attract the right talent and inspire people to strive towards and achieve goals right from the beginning. The business plan takes the side, lost on the to-do list until a need for one arises — sometimes months or years later.
On the flip side, there are the planners. People who think, analyze, map and test moves before even setting course. Evaluation and goal-setting become the priority, and managing to describe their idea in one short paragraph a lofty task of itself before they can start shaping their idea into a business.
“Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical non-planning entrepreneurs.”
In an article published in the Harvard Business Review, Francis J. Greene and Christian Hopp shared that during their research on the importance of writing business plans, they found that “entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical non-planning entrepreneurs.” Businesses that were seeking external financing were 19% more likely to plan in advance than their counterparts.
So when is the right time to start putting together your business plan? As soon as your business starts to take shape, and growth and innovation become important, it’s time to consider it. This tool could not only help with investors and lenders, but could also impact the legitimacy of your business for employees, partners and stakeholders.
If you’re unsure how to even start writing one, the BDC has some useful tips and templates available for free.
Is your business ready to scale? You should consider applying for ScaleupFest where you can expect to hear candid war stories, hard advice and the science and art of startup growth.