When you think about “writing a business plan,” what comes to mind? I know—it’s not exactly the most exciting part of launching a business. In fact, as “lean startups” proliferate and entrepreneurs conduct business in hoodies and flip-flops, the business plan may seem as outdated as a horse and buggy.
Entrepreneurs buzzing with excitement about their great new business ideas rarely want to sit down and spend weeks or months writing a business plan. As an impatient entrepreneur myself, I totally relate to this reluctance. Particularly if you’ve worked in an industry for a while—for example, you’re a software engineer and want to start your own software company—you may feel it’s redundant to write a business plan. You already know everything you need to know…right?
Another common misconception: “I don’t need a business plan, because I’m not looking for financing.” It’s true that lenders and investors definitely want to see a business plan. And technically, if you’re not seeking money from outside sources, you don’t need a business plan to show others.
But the real reasons to write a business plan have nothing to do with other people: They have to do with you.
Doing some pre-startup homework and crafting a business plan now will make your life post-startup so much easier.
Here are 5 reasons every entrepreneur should write a business plan.
1. It forces you to think through all aspects of your startup.
Entrepreneurs generally focus primarily on the “big idea”—less on its execution. While the nuts and bolts aspects of startup, such as setting up an accounting system, may not be spine-tingling, they’re essential. While writing a business plan, you are forced to consider how you’ll run every aspect of your business—marketing, managing, financing and more. In fact, the very areas you’re tempted to skim over are usually the places where you need to really drill down. The business plan gives your startup a blueprint for success.
2. It highlights potential problems.
Would you rather uncover a major flaw in your business concept during the planning stage, or when you’ve already spent money on a location, inventory and hiring? By spotlighting possible obstacles, your business plan lets you plan how to work around them.
3. You’ll be prepared for anything.
Even if you’re not actively seeking financing, what if an opportunity arises for someone to invest in your startup or otherwise help you launch? If your business plan is ready to go, you can hand it over and impress them. If it’s not, you’ll have to stall while you scramble to write your plan—leaving the impression your idea wasn’t well though-out to begin with. Think like a Boy Scout and be prepared.
4. It will help you explain your concept.
Looking for vendors, business partners or even employees for a business that doesn’t yet exist is a challenge. A business plan can help people visualize your future business and decide whether or not they want to be involved.
5. There is plenty of help out there.
Yes, a business plan involves some grunt work, such as market research and financial projections. But technology has made the planning process so much easier that there’s no excuse for skipping it. If you want in-person help, the experts at SCORE can walk you through the process of writing a business plan step-by-step. Also, read SCORE’s Business Plan Resources Page for tons of tools, templates, blogs and webinars.
By Rieva Lesonsky