Should I Write a Business Plan or Start a Business First?
Starting a new business is an exciting time for any entrepreneur. Your mind is flooded with ideas, excitement and a long list of to-dos.
While you know you would likely benefit from the direction that creating a business plan would provide, you don’t want to stifle your creativity and lose your momentum by spending time on an involved document.
Do You Need a Business Plan?
Startups are more attractive than ever. There are entire reality TV shows dedicated to entrepreneurs receiving funding for their business ideas. We constantly see flashy Instagram accounts of entrepreneurs living their best lives because their startups are making millions.
While these cultural moments add a certain appeal to creating a business, they also make it look easy. They don’t reveal the painstaking hours that a successful entrepreneur dedicated to formulating their business plan ... or if they skipped one altogether.
So, do you really need a business plan to create a successful company?
What the Research Says
Many experts have questioned the necessity of spending time on business plans, citing loss of momentum and a general lack of formality present in today’s business world. While these factors might be true, advocates of the business plan believe that acting without a plan is setting yourself up for failure.
Various studies have provided insight into the actual benefits of creating a business plan, which only further intensifies the debate.
However, a study conducted by the Harvard Business Review determined that business owners who create a business plan are 16 percent more likely to make a profit. What made this study different? It focused on why entrepreneurs plan and the underlying success characteristics that planning behavior can indicate.
Why Create a Business Plan
If the prospect of writing a business plan takes the excitement out of your new venture, try not to look at it as a task you have to do. Instead, think of creating a business plan as an opportunity to get all your amazing ideas down in one document.
You might be surprised how formally planning out your ideas and goals can reshape your existing model and introduce new concepts to your business.
If your new LLC or corporation requires funding, your business plan will help you secure investors. Startup cash can be hard to come by if you’re not prepared to answer tough questions about your mission, profitability or target markets. Your plan will help you communicate to investors why your venture is a lucrative endeavor.
Being an entrepreneur is hard work. Your business plan can help recommit your actions to your goals, assigning a “why” to everything you do. Whether you’re reaching out to potential clients or creating a website, your business plan will help guide how and why you take each step. On days when you hit a wall and need to recommit to your goals, your business plan can help ground you.
What a Business Plan Does
Your business plan helps you transform the theoretical concepts of your business into concrete, actionable statements. The key factors in a business plan include:
- Mission statement
- Business model
- Target markets
- Marketing plan
- Business goals
- Hiring employees
- Lifestyle design
The entrepreneur who takes the time to lay these items out ahead of time will have a firm stance on workplace culture, their ideal customer and the tactics they’ll employ to secure profitability.
The entrepreneur who plans also demonstrate to themselves and investors that they possess the dedication and savviness to envision a goal and make it happen.
Let Your Plan Shape Company Actions
While there are entrepreneurs who have built successful businesses without creating a business plan, the data shows that the act of planning itself positively shapes the actions of a business’s future. The entrepreneur who took the time to focus their goals and establish methods to achieve them is more likely to succeed.
Your business plan is especially helpful if you’re going to hire employees and lean on a network of professionals. You won’t know who to hire if you haven’t established facets of your business like workplace culture and a plan to market to customers. Even if you hire the right employees, they might have a hard time grasping your vision without a concrete framework in place.
When You Start Your Business
While starting your business is the ultimate goal, there are ways to get there that set you up for a higher level of success. Crafting a business plan is one of them. The important step, though, is to start.
The truth is that the presence of a business plan doesn’t guarantee success, and starting a business doesn’t replace having a plan. Instead, it’s the act of planning that helps you hone your ideas into a successful business.
If you start your business, only to find that certain aspects of your plan are no longer relevant, it’s perfectly fine to change your plan. Flexibility will serve you well, and your business plan should never feel like a burden if it no longer serves you.