It seems that every businessperson has an opinion on whether a small business or startup founder should write a business plan – from “you must have one” to “they’re a waste of time.” We believe it’s more nuanced; more of a question of when you need to write a business plan. This week, we’re discussing when it’s appropriate for a small business or startup founder to write a business plan.
You Have Tested the Idea
I don’t recommend starting your business by writing a business plan. You can waste a lot of time and energy writing a plan for a business idea that doesn’t have a market. In our programs, we take entrepreneurs through the lean startup methodology. Get out of the building and deeply connect with your potential customers to understand their needs and purchasing behavior. Use that data to develop and test a prototype for your product or service. This way you can find out if you are onto an idea that people really need and whether you are still interested in moving your idea forward.
You Are Passionate About Your Business
There is a lot of uncertainty in the early stages of business development. The process of writing a business plan puts you face-to-face with that uncertainty as you look in-depth at your business model and how you will grow your business. Check in with yourself. Unless you are inspired by and deeply committed to your business, it’s difficult to balance the natural fears associated with that uncertainty, move beyond your resistances, and develop a realistic growth plan.
You Want to Create a Thriving Business
Once you’ve decided to move forward with your business idea, how do you know if you’re taking the right next steps to build a thriving business? If done thoughtfully and intentionally, putting together a business plan can help you identify how to grow your business in a sustainable way. Through the planning process, you will define your business’ vision and goals, research and evaluate ways for scaling, create plans for scaling that are in alignment with your values, forecast how money will flow in to and out of the business, and understand what it will take for the business to achieve financial sustainability. Having that plan in place and benchmarks to measure against holds everyone in the business accountable and gives your business a better chance of thriving.