Is the business plan dead?
There's been a lot of debate surrounding business plans- how long it should be (the original 40 pages or more condensed?), what stage you should create one at, or whether you should even create one at all. I think that they're useful, but I'd love to hear what everyone else's thoughts are!
Personally, I hate 40 page plans! To read them, to do them... or to teach others about them, like I used to do.
I prefer the One Page Business Plan(R) I learned about the program from a day-long event I took in 2000. Used their resources with my clients for years, and then I became a consultant for the program in 2003.
They offer a certification program (drop my name).
I find that even banks will talk with folks who have a one pager. Not to get funding, (yet) but to talk to them. Much better than walking into a bank or VC cold.
In my experience around entrepreneurship, I tend to agree with those that have mentioned the business plan as a document that will evolve as the business evolves. This is truly because plans will not go according to how they are forecasted, but investors and partners need something to go off of in order to see that sound business sense is present, and that avenues for redirection are there in case issues arise that need to be addressed.
There's an old saying: There is no good wind for a sailor who does not know where he wants to go. First this means you have to formulate your business goals, The second meaning is the wind, an ever changing factor on your way to realise your targets. So Plan, act and "re-plan" as a constant routine.
If not you'll never reach were you wanted to o.
Business plans are essential, as a business mentor for new start ups i always encourage the development of a BP as a living document to be reviewed on a regular basis.
my orgininal BP was very basic and meet my business needs at the time, however I recently completely rewote it, it's now much more comprehensive and reflects the direction my business much more accurately.
The essence of strategy is to create value (in the business). So the plan should reflect the planning needed to do so. Simply put, it should show where the business is at now and where it is desired to be at a future point.
The tactical issue needed to get it there are written as the inclusive data. The Bank Manager (say) is looking to understand the resources available and the competency of the owner/s to progress the planning. That would include Milestones i.e. the 3/6/12/months (or whatever) updates are relevant to making progress and/or changes to planning. It's a dynamic working document subject to change within the business' operating environment. Its main purpose is to be the guideline that helps keep you on the chosen course - unless you change that course (the end game). Smaller businesses must be prepared to make changes in order to capture the opportunities - so don't be afraid the change it as necessary to meet real circumstances beyond your control. Business Plans must never be written in stone for smaller organisation's because you need to know a lot about the business landscape you are operating in and that means research before formulating the first Plan - otherwise you could just be writing personal speculation or opinion (fiction not fact).
I have always believed in the business plan, but I have long since stopped believing in the written business plan. While the questions that are asked in devising the business plan are important,not only do I think that document the answers is unnecessary, I also believe that doing so can be harmful for the following reasons.
Firstly, in a world where things are changing at an ever increasing rate the written business plan can become a document set in concrete. This leads people to try and get the world to fit the plan rather than trying to adapt to change.
I have also found that detailed business plans are often too big to revisit regularly and hence they get put on a shelf or in a drawer where they eventually turn a sepia colour suitable for a museum.
The other problem with the written business plan is that the fact that it is written down makes it seem an undeniable truth. I have always regarded the cashflow forecast a bit like ecumenic forecasts. Something that supposedly tells you the future and which you then spend time working out why it turned out wrong.
Answer the business plan questions by all means, but keep the answers in your head so that they can be modified as the world changes. Only do a business plan on paper as a last resort to appease a banker who doesn't understand but wants an insurance policy to cover his lending decision.
I believe there are other ways to get your point across besides a business plan that few people will read. I'd look at Shark Tank and see the questions asked by the Sharks and build around those. The only one's asking for business plans are people who want to learn more about the business, and less about you. I wrote business plans for years, sometimes charging as much as $7K -- I just don't do them anymore, as they are a waste of time and money. I would try to be innovative and clear-thinking. Business plans are dead, in my estimation. Go on kickstarter or do an info graphic, be creative. Have the financials on hand, but all the SWOT and stuff.. well, build it as you go along, but don't work on writing a tome that no one is going to use except to glance over it and come up with the original reason they were poised to deny or grant you money in the first place. Life is short. So is money. Be smart. Creative. The success stories in the world are not of people who followed the rules. The rules keep you down.
In very basic terms - without a Business Plan, you haven't got a Business. And of course, the Business Plan must be subjected to both Regular, and Opportune Reviews and possible Updates.
No Business can proceed in an orderly manner, without a Plan. Also, if you need to raise Funding, your Plan should be available to the Fund Sources so that they can make an informed decision on whether to lend you the money, or not. (If they say "No", you really ought to get help in to review your Business Plan - hopefully, you will have done that BEFORE needing Funds.
As for reviewing the Business Plan - this is simply common sense. You need to be able to see how well you are progressing, against your anticipated performance in your Plan. If you have constructed a sensible, auditable Plan, then you will be able to see where you are 'going wrong' and make the necessary changes. And sometimes, there are rapid Market Changes, for which you must yet again check that your Business Plan is sufficiently robust and, if not, make the necessary changes.
Review timescales ? Well, Scott's recommendations are a very good start - ensure that you have formal Plan Reviews at least once a Quarter. As for the 'Opportune Reviews' (Market Changes), please don't commit yourself to a 'knee jerk' change - make sure that you retain some flexibility. Anyone looking at the Stock Market on a Daily basis will have a different perception to someone who checks every hour - and likewise, someone who checks only once a month.
Constructing a Business Plan is not a simple matter - I recommend that you start the process on Day 1, and as you firm up on your business ideas, market, etc, update the Plan as you go.
And whatever you do, don't just write an 'appealing Business Plan' as a 'one-off', to be put away when the Business is underway. That way leads to an uncontrolled, unmanaged business, with no Accountability or Traceability that will be required.
Finally, how big should your Plan be ? Well, how big and complex is your Business ? To answer that, you simply need to set down your Process, from Start to Finish, with all the Dependencies and Interactions. Start at a very High Level, first, then break it down to Measurable Steps/Phases. Try to perform (regularly) a Critical Path Analysis, and ensure that you have Milestones to denote various actions Completed. There is absolutely nothing wrong with PERT Tools and GANNT Charts, and today, instead of buying vulnerable (single source) Business Software, remember that Excel and Access and Word can cope with ANY Project.
You first need to write a Text Summary, then construct your Plan Network, and check it for consistency.
Put simply - if you and your Staff/Client(s)/Lender(s) cannot read and understand it in an hour - it's too complex. Personally, I prefer Executive Summaries of not more than 4 pages, and probably 16 further pages of details. Most importantly - and this is why I suggested Access - ensure that every testable item/stage is indexed. If you have done your job properly, preparing Report Writers should be simple. A Business Plan of 40 pages is probably going to contain repetition - use of a Relational Database would ensure consistency.
And never forget the old mantra --> Garbage In = Garbage Out.
The business plan is far from dead. The two most important section are the Executive Summary and the Sales forecast which answer what is the problem you are solving and how much revenue will your business generate from your solution. Business Plans must be fluff-free. The length of the plan is how long does it take to identify the problem and cost of the solution, the marketing, sales, financial operations and proforma are essential. If you are looking for investor funding or a bank loan, you need a business plan. Even if you are self funding your operation, you want a business plan.
Your business plan is your navigator, your sextant, if you will, to keep you on track and on course. Without it you are without direction. Forty pages are necessary if you are selling a piece of big technology and looking for VCs or Angels, but keep in mind, the reader of your business plan is only interested in how are you going to generate revenue and how soon can a return be expected. Your business plan must demonstrate precision, uncluttered thinking and a financial plan that is tight and rock solid. To sweeten the plan, you should be able to cite statistics achieved from your minimum viable product, then your sales forecast is valid.
Personally, my business plans run 3 years and I teach job seekers to develop a business plan. I view a business plan as a friendly advisor that keeps owners on track and on target in creating objectives which are measurable and achievable.
Thanks for the question, Kimberly. Hope this helps.
Not a chance. Everyone needs a plan. Just prepare what is needed to achieve the objective.
I wish I could read the 23 responses that preceded mine in depth but at a glance they seem to be well thought out. My own point of view: the need to plan is alive and well but the business plan as we once knew it is dead. The exception to the rule is when you are seeking financing (at least through traditional sources). Otherwise I believe the best plan is grounded in how well you know yourself and your intention, how able you are to articulate your vision to those who need to know it and how willing you are to respond to what comes your way.
No for sure the business plan is not dead...
Many people are spreading this idea but I think it's simply because they have a misconception of what a business plan really is... (mainly about tech start up community).
Many people think the business plan is a 100 pages wordy document with too much analysis and projections that will never happen. But it doesn't have to be...
Your Business plan simply need to cover a few topics and show how everything works together. You can go from a simple draft to a complete plan. I generally advice my clients to try to keep it short and to the point (in 20-30 pages).
We recently raised 1,000,000US with 25 pages plan bullet pointed.
The business plan will bring you 3 key benefits: Structure your idea, Develop a strategic Plan and get a document to go after investors. Let's have a look at each of them.
1. Structure your idea
Yes you can find other tools to help you (such as Business Model Canvas) but you will quickly realize the limitations of this last one when you work in teams and need a common vision, goals and strategy.
2. Strategic Plan
The business plan includes a comprehensive strategic plan to which you can refer from time to time. When I develop BP it's the main focus and main component.
One of my first project as consultant was to help a client to develop a strategic plan 'through coaching" (4 years ago) recently my client reported a 4 fold increase in his turnover. Why? Simply because he put his strategy together and had a direction.
Yes some angels have been giving seed money to some tech start up based on a business model... But if you are looking for serious investors for a bigger project. It won't be enough.
Does it needs to be 100 wordy pages, no! Does it need a crazy marketing study - not always.
Now a final thought - I'm being approached to write business plan but I always refuse. Because you can't be lazy with your plan. You have to write it yourself. You can ask for guidance but you still need to write it. It's YOUR plan.
By the way if you are interested to learn how to develop a Business Plan in a cost effective manner without hiring a coach. You can have a look at my online courses. I have more than 5,000 students taking them on Udemy and my own platform.
Check out my website that you can find in my profile (I only have 2 courses at the moment I will upload my other one soon)
In the words of General Dwight Eisenhower, “Once the battle begins plans are worthless, but planning is absolutely indispensible.”
If you plan to finance your startup using outside funding sources such as commercial lenders, angel investors or venture capitalists, a business plan is going to be a requirement. If you don’t require outside funding – and you, partners or family members will be able to provide the initial capital investment – I strongly advocate creating a business plan anyway.
Not only is it a business document, it’s a plan for your business. In creating this plan you will have the opportunity to clarify objectives, check your math and smooth out operational and organizational issues. Your business concept, once written in the form of a plan for the future, creates the foundation for your management strategy that is to become your business.
A business plan holds you accountable and lets you measure your achievements based on your stated financial goals and operational assessments. It’s a great learning tool, and having a written plan moves your dream of success one step closer to becoming a reality.
Yes, the business plan, as we have known it, is dead.
We are in an era where static snapshots of business plans are no longer adequate. Things change too quickly.
Within the current fast-pace economy, we need to have on hand all of a corporation's assets (infrastructure, people, current products, products under design, current customers, prospective customers for new products, capital, access to capital)
The environment of choice is a Knowledgebase. When you park all of your strategic assets in a Kbase they become readily available so that existing ROIs and new ROis can be assessed/re-visited and, where appropriate, re-prioritized.
It's all about making best use of scarce resources.
If your KnowledgeBase has a graphic User Interface, the environment will let you have access to all elements of your strategic assets at ONE graphic screen. (i.e. tens of thousands of documents all at ONE screen).
You can carry out such interesting analyses as 1) where in my policy and procedure am I compliant with new legislation? and 2) where in existing legislation do I find reference to a clause in my policy and procedure?
The benefits do not end here - you can set up and highlight KPIs and dynamically consolidate entity level data to your Kbase. The reverse is also doable.
You can also launch entity-level transactions from a Kbase to individual entities.
In a warehouse application for example, you can view all suppliers in one entity at the Kbase, view inventory in another entity at the same Kbase and view customers in yet a third entity, also at the same Kbase.
As an alternative to going to three entities to fill an order, update inventory, and place a supply order on a supplier, you can, at the Kbase, generate transactions at entities simply by dragging inventory to a customer, automatically setting up a backorder if the order cannot be filled completely, then placing a supply order on a supplier.
When the supplier fills the order, the incoming receipt of shipment notice can update the inventory, and fill any backorders.
I work with about eight companies a year do develop a strategic plan. I find after we do the work together the company begins to accelerate. By year three the entire company embodies the planning process. The planning process is as much about alignment, engagement, accountability, than just strategy. This mean that it must involve a large number of employes. The planning process I use albeit comprehensive brings it down to a single page that includes values, vision, mission, organizational strategy, objectives, operating strategies, and actions. See the following post: http://www.co2partners.com/blog/2010/12/strategic-planning-motivation-3-0/
the plan can be anything from 1 page to 5000 pages but if you are serious about business you will plan, from product to marketing and customers. As a small buisness mentor ignore plans at your own peril
As with all things, it depends on the stage of the business and the purpose. I recommend writing a business plan for all startups for the simple reason that I'd rather lose money on paper before losing it in real life. Startups should go through the exercise of Industry, competitor and target market analysis coupled with financial forecasting, cost analysis, and feasibility (operational/financial). Many startups have what I call a "hope plan." They hope to make a profit and hope to be successful. With a business plan you have targets and know very quickly whether you are reaching your goals and whether you need to make adjustments. For existing businesses a feasibility analysis may be enough unless they are seeking Angel or Venture Capital. The saying holds true, fail to plan, plan to fail.
In the book "Advantage" "A Roadmap for Entrepreneurs and leaders in the digital age" The concept of Agile Entrepreneurship and an agile business plan is outlined. Like most of the commentators here have indicated its a living working document for the Entrepreneurial team and relevant stakeholders. They key concept is that it moves away from the traditional sequential descriptive business plan process to the concept that business start up and "Doing the right things, the right way at the right time" where decisions, priorities and actions are guided by data and information about the business venture, its offering and it environment. Creating a business plan is not the first thing you do as an Entrepreneur, and its not a once off process that can be done over a short period. You need to have answers to key questions , based on experiential research before you start writing the plan and continually refine the plan as you learn. As regards the number of pages its hard to be prescriptive it really depends on the business, context and needs of the stakeholders. If you have a major complex infrastructural project with public and private funding lasting many years and with a very large budget and high levels of risk and scrutiny then there may be a compelling justification for a BP hundreds if not thousands of pages long. However for the majority of ventures I usually suggest circa 20 to 30 pages on the basis if you can not articulate the proposition in a reasonably short document then you are likely to have more work to do.
Kimberly. Yes. It is only a ghost wondering around lenders.
We assist clients with business planning and unfortunately many clients just look at doing business planning to gain a loan from the bank.... However, we explain to them how it is definitly a 'living' document and should be updated monthly, quarterly, and annually to see where the business is heading. I like a lot of the comments on here because in my opinion the business plan is not dead... however more needed than ever.