What is a Business Plan?
Business plans can be defined as: a document, usually 10-20 pages long, that describes the opportunity, product, context, strategy, team, required resources, financial forecasts and expected returns of a business venture.
Are Business Plans Necessary to Start a Business?
In our opinion, no, a formal business plan isn’t necessary to start a business. However, it is important to write down key components and organize thoughts and plans. Business plans are never perfect but it does begin the process of formalizing a business idea.Most successful companies never had a formal business plan. However, we recommend completing a business model canvas exercise and have a one-page strategic plan. David Cummings, a successful entrepreneur and investor who had a successful exit from Pardot, describes the one-page strategic plan more in his blog post on the topic. It’s well worth the read if you’re serious about starting a business.
Are Business Plans Ever Required?
Yes, particularly in circumstances when a business is seeking outside financing through traditional means such as lending institutions. In addition, if you ever seek to lease commercial office or retail space, the owners will require you to submit your business plan to them. Since it may be several months before you’ll embark on either of these circumstances, we recommend to start with a modestly written plan and build it over time. This will ensure that the business plan reflects the most current understanding of the business and be effective in communicating the business to investors, bankers, or potential team members. In addition, the business plan is a tool that can be used to align the interests of all parties involved in a new business venture, thus, it keeps everyone on the same page with a common understanding.
Overall, formal business plans are outdated in today’s terms but nevertheless, the components of it are useful in bridging participants around a common goal and vision for the company. TPM Focus highly recommends that after you complete the business model canvas, you create an executive summary as well as maintain a one-page strategic plan. You should share it regularly with your internal team and investors. Both documents are incredible communication tools for attracting talent, investors, and staying the course in building your business.
Overall, formal business plans are outdated in today’s terms but nevertheless, the components of it are useful in bridging participants around a common goal and vision for the company. Click To TweetThe business plan is a tool that can be used to align the interests of all parties involved in a new business venture, thus, it keeps everyone on the same page with a common understanding. Click To Tweet
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