Business plans aren’t only for entrepreneurs. Any new venture requires thorough planning before you launch it if you want a reasonable chance of success. There are a lot of myths about business plans out there. Today I’d like to debunk three of the biggest ones.
It’s exciting launching a new business. Whether you’re building a new venture from scratch or creating something new within a large corporation, remember the old adage that “only fools rush in.”
One of the biggest mistakes you can make during an exciting launch is saying, “I’m too busy to write a business plan.” More often than not, that lack of planning will come back to haunt you.
There are three common myths about writing a business plan—and buying into them can signal the beginning of the end for your venture.
Myth 1: Business plans are only for new startups seeking funding
“I don’t have to write a business plan! I’m not launching some brand new startup.”
Notice it’s called a “business plan”—not a “startup plan.” If you’re going to invest in building a business venture, you need to think things through. You’ll be risking money, time, energy, and effort in the hopes of building something great. Isn’t that investment worth a little planning?
A good business plan will help you think through how you’re going to spend those investments wisely. It’ll also point out where your biggest risks are and provide direction on how you can mitigate them.
If you are launching a startup, you absolutely need a business plan even if you’re not seeking outside funding. You’ll be investing your own personal time, energy, and funds and those investments come with a true opportunity cost as well.
But business plans for existing organizations looking to expand or build new divisions are even more critical than business plans for startups. The stakes are much higher for larger businesses simply because the investments are larger and a failure of the new venture can also harm the existing business.
Myth 2: Writing a business plan is a huge ordeal
“Business plans take forever! I don’t have time for that! I need to be working on launching the business!”
Many people believe that writing a business plan takes hundreds of hours and tons of analysis—that it, in fact, involves some form of business black magic.
Not true. Yes, a good business plan is well structured and thought out. And figuring out what goes into it is hard work. Fortunately many people before you have already done this thinking, and you can take advantage of that.
There are plenty of great “interview style” templates out there. And my new video course Writing a Business Plan on lynda.com can make the process relatively simple.
Find a great template and a primer on writing a business plan and you’ll find the process is much less painful than you think.
Myth 3: A business plan is useless after you write it
“Once I finish writing a business plan, it’s irrelevant. I’ll put it on the shelf and never use it again.”
When written properly, a business plan is a living document you can refer to and refine on an ongoing basis. It contains your assumptions, your milestones, and great information about your product and market.
As you learn and grow, you should go back to your business plan and update it. Plug in your new assumptions. Correct your understanding of the market. Shift your timelines and milestones based on how things are playing out in the real world.
Maintaining a current business plan enables you to react more rapidly to changes in the market. If you can go into a financial model, update your assumptions, and crank out new projections, you can make required changes to the business more quickly and with less risk. You can use your plan to keep track of milestones and take action when you get early indications that things are going off track. When used well, your business plan can help you avoid many of the major risks that doom a venture to fail.
Invest before you invest
If you’re serious about launching a new venture, invest the time and energy required to create a solid, well thought out business plan. The better you’re able to assess the market and plan for the inevitable challenges you’ll face, the higher the chances are that you won’t lose all the financial investments you eventually make in the venture. Invest your time before you invest your money.
To learn more, watch my new course Writing a Business Plan on lynda.com, including free chapters on
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