Why Business Plans Are Important
One of the first pieces of advice from most business consultants regarding a new business venture is to develop a business plan. Plenty of start-ups tend to view a business plan as a pointless academic exercise. Post a few pictures on Instagram, create a LinkedIn Page and ordering a high-end coffee maker are the more typical approaches to a new venture. Nothing wrong with getting the message out but there also needs to be a roadmap or plan outlining how the business will grow and generate revenue over time, as without the plan in place the new team will encounter challenges attempting to quantify next steps or measure achievements.
The model for a business plan should be different and unique for each idea and team. It does not need to be 100+ slides in PowerPoint or a multi-chapter document, but instead a living document helping guide a team during times of challenges. The goal is to create a reference document that can be used to guide the business as it encounters challenges or help plan as a company starts to grow.
Having a business plan also pushes founders to build a concise message about the company, what it does and where it is going. Outlining these concepts also helps explain the new venture to prospective clients and outside investors.
A few points we recommend for a good business plan:
Measurable. Have key areas of the business which are easily measured and tracked over time. Examples may be customer numbers, product sales, or revenue.
Understandable. As a company grows, new team members should be able to read the business plan and quickly understand the company, its goals, and general path over the next few years.
Focused. Business plans do not need to be 100+ pages, a general bullet point outline is sometimes all that is necessary. The goal is pushing founders to think through the business concept, how it will make money, and look for blind spots or areas not previously evaluated or considered.
Adaptable. Any plan should be a living document and change over time as a business grows. A common mistake is creating a plan and forgetting about it. Instead, it should be reviewed at least annually and adjusted as needed.
Let us know how we can help guide your team in creating and maintaining its overall business plan. We have worked with start-ups to billion-dollar companies and have never seen a business fail because the team created a plan, but have seen several failed businesses which had no business plan in place.