It’s a shame that so many people think business plans are just for startups, or to back up loan applications, or for getting investors. The truth is that business planning offers serious benefits for everybody in business.
The fact is that a business plan — even just a one-pager with a few financial projections — can be a valuable internal tool, without a plan you don’t have direction. A roadmap for even the smallest or earliest-stage idea. It can foster alignment, set the tone for the business and even help you craft your brand messaging.
We asked members of the Young Entrepreneur Council (YEC), an invitation-only nonprofit organization comprised of the country’s most promising young entrepreneurs, the following question to figure out when (and why) a business plan is an asset, even if you’re not planning to raise one penny:
“What is one good reason to write a business plan even if you’re not going for a bank loan or venture capital?”
Here’s what YEC community members had to say:
“Writing a business plan or putting together an investor deck allows you to think more clearly about what you’re doing and where you are going. Key point to remember though is that the minute that your business plan hits the printer it is already out of date, so don’t depend on it as your to-do list. Think of it as a roadmap.” ~ Paige Brown, BookingMarkets
- Gain a Deep Understanding of Your Market
“Although it took several weeks and I’ve barely looked at it since, I credit my business plan for helping me understand a brand-new industry in an extremely deep way before actually entering it, and for forcing me to deeply examine how we would fit into the market and what TalentEgg’s probability of success was. As a “risk averse” entrepreneur, it was critical. ” ~ Lauren Friese, TalentEgg Inc.
“The biggest reason to write out a business plan regardless of any financing option concerns is that it can help you stay organized and remain on track. Businesses without a plan can easily get off-target, and revenues will suffer as a result. Creating a plan with expense projections, revenue forecasts, and more can help a small business remain committed to its long-term goals.” ~ Andrew Schrage, Money Crashers Personal Finance
- Practice Makes Perfect
“It’s great to write one simply to throw it away. The mental gymnastics are great. The plan is basically worthless the moment you’re finished – but it will force you to think about things you might not have otherwise.” ~ Brent Beshore, AdVentures
- Confirm the Math
“A lot of ideas sound great on paper and even in discussions. However, simple math can make or break an idea. Before we launch any new idea, we at least create a financial model to project the ROI from several realistic scenarios. You can save a lot of time and frustration thinking through the numbers, and making sure it’s possible to hit your revenue and profit goals.” ~ Phil Frost, Main Street ROI
- Iron Out Possible Kinks
“Writing a business plan allows you to really think things through. Your plan should question the validity of your ideas, the product/service target markets and so on. It should force you to do your own proper due diligence.” ~ Nicolas Gremion, Free-Ebooks.net
- Foster Alignment
“Writing a business plan is an ideal way to make sure that everyone on your founding team is aligned with the current and future plans for the business. In the early stages of a company, it’s imperative for founding team members to be on the same page as to how they’ll work together on moving the business forward to great success. Avoid any miscommunications by getting it all on paper early.” ~ Doreen Bloch, Poshly Inc.
- Hold Yourself Accountable
“A business plan is a great tool that allows founders to articulate their vision and future plans for their company. When using any business plan format, there are standard questions that force you to think & create a long-term vision and strategy for your idea. Once these are down on paper, they can serve as a guide to allow you to track your progress and hold yourself accountable for the future.” ~ Aron Schoenfeld, Do It In Person LLC
- Know Your Message
“Business planning is incredibly helpful for describing what you do, understanding who your competitors are, and crafting a realistic three to five-year plan. Each of these activities is crucial if you are looking to launch or expand a venture, and learning to speak concisely about your company will always be crucial no matter what stage you’re in.” ~ Garrett Neiman, CollegeSpring
- Establish Benchmarks
“Business plans are a valuable, iterative, document that can serve as a successful benchmarking tool. Where did your business exceed expectations? In what areas did your strategy maybe fall short? While it’s fine to “pivot” your company based on what you’ve seen in the market, having something in writing puts the onus on you to be honest about your company’s performance. ” ~ Charles Bogoian, Kenai Sports, LLC
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.
Good article, thanks for sharing.
I usually revized my business plan once a year mostly for three of the reasons outlined in the article: organization, benchmarking and accountability. It really helps me in determining if I reached the goals for the year.
ekele onuh oscar
The content of this article speaks true and. Through! I particularly like. Reason 8 9 and 10 for articulating the guiding role of business plan for burden entrepreneurs
Writing a plan to have it reviewed by someone else is also a smart move – an objective opinion can help you recognize inconsistencies or risks in your business, and give you insight on what to do to stay competitive and win more customers.
It’s all true, and this post rocks.
To start a business…to grow a business, without a plan these days?
Again, good job.
The Franchise King®
Great post. It’s important to have some form of business. Regardless if your starting an online or offline business. Having a business plan is like the knowing the end of a movie and working backwards to get there.
Writing the business plan allows the entrepreneur to know exactly where the business is going. It allow us to set objectives and compare exact result with projections. Business without a plan is a failure.
Great insights about practical value and rationale for writing business plans.
You would not book an airplane plane trip without knowing a destination, visit duration or weather forecast. You would not step onto the field for a superbowl game without a game plan. How much more so we need a business plan for a new venture with so many variables to address, so many opportunities to pursue, so many competitors to contend with and so many customers to delight!
Sylvester Di Diego
Great reasons for putting together a business plan! If you’re in the UK, we’re running a business plan competition actually for funding if you’re interested in not just getting your business plan looked at but also presenting it to a group of people with experience who eat startups for breakfast! Check out RBS EnterprisingU!
My company was put illegally out of business by DeSoto County Florida within 2 months of the purchase of a fish farm in Arcadia Florida. I must now create a business plan and loss statement?
How does a company create a loss statement when only in the development process?
I always cringe when I read an article declaring the death of business plans, and these are 10 great reasons why. This is a topic I’m pretty passionate about.
Excellent post. Point #7 is controlling.
Great post. Kudos for the indepth analysis! keep it up
I’m reminded of Michael Scott’s failure to write a Business Plan and Mission Statement…
A lot of people don’t understand how organization is key when starting up a business. A business plan can help keep you on track and focused. The first year is by far the hardest year of all! a lot of people who do not create a business plan do not succeed due to being under prepared. Don’t get caught up in rushing to opening up, slow down and develop a plan. I really like this post and thought it was really good. Check mine out at sometime.
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God bless him
my name is ZAMO NXUMALO from South Africa.I’m 22 years and I want to register a loan business. I need advice on the basic things that should appear on my Business plan
Writing a business plan is great way for organising your thoughts, planning for future and understanding market. Reason 2 by Lauren Friese, TalentEgg Inc. about deeply understanding what market you are going into is what I liked most about this blog.
Overall great article. kudos.
Thank you for compiling such a thorough, and thoroughly useful, list