I had the immense privilege this week of spending a day with 50 excited, keen and passionate new business owners; all of them were about to start on the adventure of starting-up a new company. My task for the day was to help them create an effective business plan as they begin a year long programme of tailored support (if you are in the West Midlands of England check the BSEEN programme out).
Throughout the day I was fascinated by the range of business ideas in the room, the types of organisational models being developed and the depth of knowledge from these start-up leaders. From this diversity, two common questions did emerge:
Do I really need a business plan?
Where do I start with my plans?
Good questions; any start-up entrepreneur knows how they use their time is vital so defining why something should be done and then how best to start makes sense. So, for those that may be asking similar questions I’ve shared my answers below as food for thought:
Question: Do I really need a business plan?
The answer is ‘No’… and it is also ‘Yes’. No-one has to write a plan, it is not compulsory for starting a business. It all depends on context. A couple of people in my LinkedIn network shared their views on this recently:
“Didn’t have a business plan - grew organically for the first couple of years but then realised I was being pulled in too many directions so at that point did do a plan. The key thing for me is that’s it’s a live document that needs to flex and adapt to changing circumstances.”
“Forget them at the start! Find something you are truly passionate about. And START. The BP will develop naturally. Usually from about Month 3 or 4 (after tonnes of focus on sales and meeting people from the industry etc).”
I appreciated their honesty but the interesting point was that both business owners moved quite quickly to writing a plan. I understand why we do not like them. Plans sound very formal, they can feel staid and unexciting. Plus the business idea is dynamic, evolving in our minds all the time at the start and not easy to put into a words let alone a linear, page by page structure.
This constantly evolving and changing situation is precisely the reason for a plan being of value. The first one you write should be different to the one you have after 6 months. The first one you write will most likely not be the only one. By moving thoughts and ideas from your mind you begin to create a structure for your ideas to be tested and refined. Often what we think something should be can be deceptive; our minds can easily twist reality or tweak expectation; it is easy to build something with a blindspot that later on costs us money.
When you write ideas out you can test them, review them and refine them. You as the business owner need to spot the flaws in advance and seize the opportunities around your ideas to best effect. As you lay out your plans you can pivot the business to a better option or stop a line of thought as you realise it does not stand up to financial scrutiny.
Another big factor in why you might write a business plan is connected to what you need to invest and / or risk to start a business. For instance, if you need to borrow £100k from the bank a sound, detailed and costed plan is necessary. If you need just £5 from your pocket and 2 hours of your time to start, you might not write down too much. So, if you have external agents to bring into the business in some way (such as a partner, investor, funder, key supplier, etc.) a plan helps you show credibility and gives you substance for negotiations.
Finally, the style of plan is also flexible. If you like pictures, trying using symbols and imagery as you compile your plan. Not all plans have to be 50 page text documents with complex spreadsheets. They need to suit you and the audience they are written for, so they become interactive as you update them and improve your thoughts.
Now, lets look at the second question.
Question: Where do I start with my plans?
One reason business plans do not get written is start-up owners can feel daunted by the prospect. Well, a measure of a person’s readiness to run a business can be seen in their response to such a challenge.
Why? Well, running a business is daunting; so if writing a plan is too hard right now, an honest question to ask yourself is are you reallt ready to build, sustain and grow a business? It is a crucial question. Business ownership brings lots of choice, options and decisions (plus paperwork!). If the challenge of describing your idea is too great, it may be an indicator that this is not the right time (or right business idea) for you.
The way to approach this question is to recognise that the contents of a business plan are interconnected. Decisions on product affect marketing, decisions on marketing affect finance, decisions on finance affect the timing of actions, and so. By writing and refining one aspect of your plan you may be required to review all others.
Therefore, my advice is start somewhere. Anywhere actually. If starting at the beginning suits you, start there. Put down your thoughts and build on them. If making a spreadsheet is the easiest place for you to start, do that first. If you are most comfortable describing potential customers begin there and move on. Start somewhere, as every part will need to be edited, reviewed, improved and connected as you progress.
As a practical way to start a plan, we recommend using the Business Model Canvas as it is a visual ‘map’ that can help you collect your initial thoughts and then construct a document thereafter. It can be constructed from bullet points, post-it notes and lots of paper; then you can begin to write out the detail. This is just one of many types of planning tools now available online so try some searching so you choose a format that best suits you and your business.
Therefore, in summary as there is much more I could write, the essence of my answers are:
Yes you will do well to write a plan; and,
Start with the part you know best and build from there.