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• Country: South Africa
• Date: 2018-11-08

The business plan is the blueprint for your business. You wouldn't walk over to an empty lot and just start nailing boards together if you wanted to build a house. Starting a business without a business plan is just as foolish.

Yet unlike a house, a business isn't static. We often make the mistake of thinking of a business plan as a single document that you just put together when you're first starting out and then set aside. Something to check off the to-do list and be done with.

But in actuality, the business plan for any business will change over time as the business develops, and any particular business may have multiple business plans as its objectives change.

In the growth phase an updated business plan is useful for forecasting or raising additional capital for expansion, and if you decide to sell or close the business the business plan can include strategies and timelines for the transfer to new ownership or dissolution of the company.

Here are five good reasons why you should write a business plan when starting a new business.Why You Should Write a Business Plan
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Why You Should Write a Business Plan
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BY SUSAN WARD Updated July 08, 2018
The business plan is the blueprint for your business. You wouldn't walk over to an empty lot and just start nailing boards together if you wanted to build a house. Starting a business without a business plan is just as foolish.

Yet unlike a house, a business isn't static. We often make the mistake of thinking of a business plan as a single document that you just put together when you're first starting out and then set aside. Something to check off the to-do list and be done with.

But in actuality, the business plan for any business will change over time as the business develops, and any particular business may have multiple business plans as its objectives change.

In the growth phase an updated business plan is useful for forecasting or raising additional capital for expansion, and if you decide to sell or close the business the business plan can include strategies and timelines for the transfer to new ownership or dissolution of the company.

Here are five good reasons why you should write a business plan when starting a new business.

01 To Test the Feasibility of Your Business Idea
Creative business people reviewing proofs in sunny office
Milton Brown / Getty Images

Writing a business plan is the best way to test whether or not an idea for starting a business is feasible, other than going out and doing it. In this sense, the business plan is your safety net; writing a business plan can save you a great deal of time and money if working through the business plan reveals that your business idea is untenable.

Often, an idea for starting a business is discarded at the marketing analysis or competitive analysis stage, freeing you to move on to a new (and better) idea.

02 To Give Your New Business the Best Possible Chance of Success
Business partners smiling in a wine bar
Jetta Productions /Getty Images

Writing a business plan will ensure that you pay attention to both the broad operational and financial objectives of your new business and the details, such as budgeting and market planning.

Taking the time to work through the process of writing a business plan will make for a smoother startup period and fewer unforeseen problems as your business becomes established.My day job is writing books, and I have written a lot of them. (I didn't have a choice. When you have four kids to feed and put through college, neither sloth nor writer's block are options.)

And if you write a lot of books, you need to generate a lot of book ideas. A couple of years ago, I came up with what I thought was a terrific one. I would go to successful entrepreneurs and ask them for copies of their original business plan. I'd organize the plans by key business insight--marketing, distribution, whatever--and that way potential entrepreneurs could see at a glance the sort of things they needed to do to be successful.

There was only one problem with the book concept. Most of the business plans had nothing to do with what the businesses eventually became. People who said they were going to specialize in developing new computer hardware ended up in software, for example. Companies that started with the goal of serving the end consumer became specialists in helping distributors. In a surprisingly high number of cases, what was in the business plan ended up having very little to do with what the (successful) company ultimately became.

I never did the book.

                            Basically, a waste of time

I know the first sentence of advice to would be entrepreneurs is usually "go create a business plan." But my experience in writing about and learning from entrepreneurs for the last three decades is that creating a painfully detailed business plan really doesn't make much sense (with one limited exception that I will discuss in a minute.)

Why doesn't creating a business plan make sense? Because you can plan and research all you want, but the first time you encounter something you didn't expect out in the marketplace, the plan goes out the window. Once you are underway, things never go exactly the way you anticipate.

Ah, you say, that means you didn't plan enough. No, not really. It is impossible to make a list ahead of time of all the things you haven't thought of. (Go ahead. Try.)

But the problem with creating a business plan actually start long before you are underway.

The longer you plan, the longer you are not in the marketplace. And that means three things are happening, and none of them good.

1. No revenues are coming in.

2. Someone could beat you to the punch and introduce your great idea before you do.

3. The market is changing and as a result you could fall out of step. To use an extreme example to make the point, while you are planning how to make the world's best VCR, the market shifts to DVRs.

Given all those reasons, puting together a full blown business plan doesn't make any sense to me, unless you need tens of millions to get underway. In that case, you are going to need to do one. Professional investors, such as venture capitalists, are going to require it.

But few of us need that kind of money. If you don't, do the absolute minimum amount of research, just enough to convince yourself the idea is a good one and then get out into the marketplace and ask people to give you an order. If the answer is yes, you have done all the research you need.

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Paul B. Brown is co-author of Just Start published by Harvard Business Review Press.
Please note his blog appears every Sunday and Wednesday. Click on the "Following" button to get every new blog post as soon as its goes live.

I am a best-selling author, and an extremely proud Forbes alum. A former writer and editor at Business Week, Inc. and Financial World, in addition to my six years at Forbes, I've written, co-written and “ghosted” numerous best-sellers including Customers for Life (with Car