The fact is that a business plan — even just a one-pager with a few financial projections — can be a valuable internal tool. 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.
And where did it come from?
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.
So what’s on the list? The best thing to do is click and read, but here are some of my favorite points (emphasis is mine):
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 Key point to remember though is that the minute that your business plan hits the printer it is already out of date, so don’t depend on it as your to-do list.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
In this case I like the caveat as much as the main point. Not that they aren’t essential, but the shelf life of a business plan is a few weeks.
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
Exactly: the business plan is about management and accountability.
4. 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
I’d actually rather say review and revise regularly. It’s never perfect, but always essential.
5. 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
This is also about breaking the uncertainty into pieces, which is about the numbers.
7. 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.
You could also call this communication between team leaders.
8. 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
Which is why my angel investment group reads business plans of any business we’re seriously considering. And also, a nice reinforcement of point 4 above.
10. 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
Yet another reinforcement of points 4 and 8. Metrics and accountability.