Do I Need a Business Plan to Start a Business?
One of the first steps to starting a business is creating a business plan.
Your business plan outlines the problem(s) your business will solve, the opportunities you will seize, your target market, your marketing and sales strategies, your competition, your costs and projected revenues, and other important information.
Of course, those numbers don’t mean shit, but investors like to see them.
Business plans are a common topic for debate because the old-school business guys and MBA types in the corporate world think a business can’t possibly exist without a business plan. On the other hand, many entrepreneurs launch successful ventures without a business plan, and the idea of writing a business plan is a joke to them.
I believe the best course of action lies somewhere in between those views.
Every business requires thought and strategy, or at least a clever idea, to have any chance at gaining traction. However, most businesses don’t require a formal business plan to get started.
Why You Need a Business Plan
There are several scenarios where you would need a business plan.
The most likely scenario is that you are seeking investment for your business. In this case, you will need a business plan to present potential investors.
Investors want to see a rock-solid plan, and ideally, they would like to see proof of concept. That means you already have customers or you at least have a collection of warm leads who are waiting for the launch of your new product.
The Real Value of a Business Plan
Regardless of whether you’re raising money or not, the process of creating a business plan forces you to think critically about your business.
It forces you to get to know the people who might buy your products/services, it forces you to get realistic about the costs, and most importantly, it forces you to figure out how you will differentiate your brand from the competition in your niche.
This process is necessary for trimming the fat off of your original idea and making the necessary tweaks to prepare for the market.
Why You Might Not Need a Business Plan
Some businesses (online businesses especially) with lower costs don’t require an extensive plan because you can A/B test as you go and make the necessary changes.
You can’t actually expect to predict the future or follow your plan exactly because the current business climate evolves too quickly for year-long plans, much less five-year plans.
However, that still doesn’t mean you shouldn’t give careful thought to your business and carefully research the market. You don’t want to waste years of your life on a poor business that you could’ve avoided with a little extra time upfront.
What to Do Instead of a Formal Business Plan
At an absolute bare minimum, you can use a couple of resources from $100 Startup by Chris Guillebeau.
One-Page Business Plan:
Those resources aren’t as comprehensive as a real business plan, but they’re enough if you’re going to start an online business with low overhead.
The Easiest Way to Create a Legit Business Plan
I’ve reviewed hundreds of business plans throughout my career and I’ve helped create several business plans myself.
Most of the time it’s a big pain in the ass.
Believe it or not, the best business plans are usually completely outsourced. The founder(s) will hire someone to do most of the work, which often runs up to $10,000+ for a high-quality, detailed plan.
I don’t know about you, but I’m not going to spend that kind of money on a business plan. Plus, I’d rather do it myself for the reasons I mentioned earlier — the process of thinking critically about your business is the real gem here.
I needed to create a business plan recently, and I quickly remembered what a tedious task this process can be. I enjoy doing all the research and laying out my strategies, but I get annoyed with all of the structuring and formatting of the actual document.
That’s when I found an online service that makes this entire process incredibly easy.
That service is called LivePlan.
I was originally drawn to the service because it handles all of the tedious stuff like formatting the document, creating charts for your financials and because they make it so easy to create a nice presentation.
However, if I were creating a business plan for the first time, this would be a life-saver!
Their service takes you step-by-step from business idea to a professional, well-planned business strategy. I’ve never created such an attractive business plan in such a short amount of time like I did with their service.
All of the graphs and financial forecasting features are more than worth the price alone. The fact that you can do everything step-by-step made it a no-brainer for me.
In fact, I’ve already got feedback from potential investors and even they were very impressed. Of course, that probably had more to do with what was in the plan, but a nice presentation goes a long way.
I probably won’t take on any investors for my next project because I like to maintain full control, but I’m still glad I used the service to create my plan.
If you are serious about getting an investor and you don’t have the resources to hire a professional to do it for you — I highly recommend you check them out.