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The Wall Street Jounal agrees with you. On June 22, the Journal reported "why business plans don't deliver".
I think it depends on the format and function of a business plan.
For the most part, I think the plan helps you stay on track and brings some organization to your efforts. I use my plan as a resource to remind me of how I want things to flow. Do I read it regularly? No. I do look at it when I feel I am getting off track.
Do you "have to have" a business plan to open and run a business? I don't believe so. I think it might be harder to do without one but I know it can be done. People have done it before. I'm simply being honest - business plans don't make or break a business, the people running it do.
Boy, I'm going to catch some flack for this.
I took a workshop because I do want to run my own business. I have taken some business classes and I feel ok about how to run one. I have gone so far as to put out feelers for a mentor. Granted he runs a family owned buisness, he has never seen the business plan for the company. His father started it when he was smaller and the busness does well for itself now. At the workshop they sort of hinted around well you absolutly need one to be in business, everyone has one and they wouldn't be in business without one. I can understand if you need investors and loans it makes sense, That way if your business doesn't take off and you are forced to sell assets they want to know you have a plan.
Now I have worked at places and no one has every said or asked, " Hey what does the business plan say about that?"
I have to ask when have you had to refer to your plan? in what situation did you find yourself lost that you needed to go back to it?
I completely understand where you are coming from on the business plan front. No, you don't necessarily need a business plan to run a successful business but if done correctly it can be a very uselful and important tool to future development. Granted, if you are not going to look for some sort of financing with the plan you aren't really going to need a formal plan but it is always good to write down your ideas and thoughts. This is often referred to as a concept plan. The reasoning behind this is you may have a great idea and if you don't write it down you may lose some of those valuable thoughts.
No one is going to say, "let's see what the plan says about that" but if you have an ongoing idea of what your plan says then it is more than a little useful. Your business isn't going to fail based solely on the fact that you don't have a plan but the fact that you took the time to plan it out or delegate it to someone who is good for that job shows personnel and time management skills which are important to successfully running a business. In addition, when you are writing a business or concept plan you are forced to ask yourself tough questions and find answers to different circumstances that may arise so that you are not taken by surprise when they do.
I know that I have referred back to my business plan for things like marketing ideas that I completely forgot that I came up with but for the most part that is the only reason. However, knowing the ideals and reasoning behind those ideals makes it an easier process going forward. That being said, each person is different and the way that each person runs there business is different. You may be someone who is in the moment and very successful in the moment. Good luck in whatever you are doing!
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Okay...this is the deal. As a management consultant I have had to deal with this question for many years. Is a business plan absolutely necessarily? It depends on the individual or team running the business. But in almost every case, regardless of how experienced the entreprenuers are, doing a thourough business plan will be helpful. If you have ever done a thorough business plan before ( I don't mean just throwing something together to get a loan) it forces you to think about and consider things that you may skip over. It is a phenomenal tool. But remember, no business plan is true. All business plans are obsolete the moment you finish it, but you are always a better entrepreneur because of doing it. GOY lazy A and do a business plan!
A business plan is really just a tool to help you communicate what you plan to do, and how exactly you plan to do it. It can be used to get financing or buy-in from investors, to help partners (or a spouse in the case of a mom-and-pop shop) agree upon exactly what the business is doing and how it will operate, or to communicate your business vision to mentors or advisors. I would recommend drafting at least a rudimentary business plan (who/what/why/where/when) to allow you to communicate effectively to others should the need arise. This can be very simple and flexible enough to change as needed.
Business plans are still needed especially when looking for financing. Many lenders do look at these, especially when trying to finance through strong business credit as opposed to a personal guarantee.
You ask if a business plan is necessary. The answer is a definite maybe - as it depends on you, your experience and expertise in general and in the business you are starting or running, the size and nature of the business, etc.
If you are looking to start a new business and simply wish to plow ahead, go for it, but know you are far more likely to make unncessary and costly mistakes than if you had done the research first, inquired from your colleagues, thought through the range of issues you were likely to face, done your projections based on worst case, best case and something realistic in the middle and so much more. This work can be of great value whether you are seeking outside funding or not.
You can find a range of business plan templates that help walk you through the process but the work must be done by you. For help, www.sba.gov then click on Local Resources and then click on Small Business Development Center (SBDC) for no cost local counseling from paid professionals who want you to succeed.
Good luck. Ben
Well I will agree with you. If you are NOT looking for funding from a bank or places like SBA. You do not need a business plan at all....However....A business plan set in place is not going to hurt your business. After all if you run a business you are going to want to set some goals...right? So that is how a good plan will kick in.
Always make a plan no matter what (loan, goal, life, etc.) as it will help you in the long run
You'll also need a financial model. Be sure to make it interactive, which means it will be formula based and take longer to create than a basic static model. But trust me, you will definitely change your financial projections, so provide for flexibility from the get-go. An interactive model will also help you address "what-if" scenarios. Chances are good that potential financiers will slash your first-year revenue projections in half. What repercussions will this have? Run it through the model and find out.
I'm of the opinion that one always needs a plan. If the plan details your business then in fact, you'd have a business plan.
While some of the elements of a formal business plan may be annoying; it's a good foundation to have everything down on paper.
May be you don't have to go nuts with the financials or colorful details of sales & marketing goals; but why not have everything laid out?
I think the modern business plan is a living document and should be updated at least yearly if your business is or continues to evolve.
OK I hear you guys, I'm not the kind of person to just jump in to something. I have my business idea and I know how to work it. I'v complied a list of people that can get me equipment so I know about how much I need for that. I also have a mentor already in business so if I do get in trouble I can ask his advise. I know my competition in the market and where they have their nitch. I also know some pricing so I can be competitive. I'm still on the fence about the business plan but At least now I can think if it in a diffrent way. The workshop I did attend made it seem like you could not be in business without it. Then shuffled you towards the loan line. Unless someone has some small venture capitol they feel like parting with...
When you consider the high fail rate of businesses, a business plan is not a bad idea if it helps you avoid potential business investment losses. If you're just starting out, especially if you're a corporate escapee and have never worked on your own before, a business plan makes sense in that it can help clarify:
-how you're hoping to finance the business;
-whether it's a viable market niche;
-how to set realistic pricing;
-learn about the competition and how to position yourself against it;
I think if you create a business plan and do nothing with it, you're wasting your time. At a minimum, I would send it to other business people, particularly successful ones, you respect for feedback; and tell them to be brutally honest because their honesty could be the difference between success and failure, making money and losing it.
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Yes I know all about business plans, however do you really need one excpet to make a bank happy if your looking to them for money? Ok so it lays out what your business does, it's mission statement, blah blah blah. Lets face it your in business to make money, a business plan is just that, but no one can write, money money money ya! I think it's useless if you are not looking for investors or bank money to fund you.