When Does it Make Sense to Write a Formal Business Plan?
There are two situations where a business plan is beneficial. One is where it’s impossible to begin without a capital investment by outsiders. If your startup is going to be the next FedEx and needs fifty aircraft, 2000 employees, and facilities in twenty cities just to open its doors for business, you will need a business plan to raise the necessary capital. The other situation is where you are a complete rookie at entrepreneurship. If you are inexperienced in running a business and cautious by nature, it may make sense to take the time to thoroughly research the opportunity and write a business plan for your own personal benefit. (It goes without saying that the latter person should not write the plan with any expectation of raising outside capital with it. Investors do not back wet-behind-the-ears rookies.)
Why Does Everyone–Outside of Entrepreneurs Themselves–Put So Much Importance on Business Plans?
Dr. Bhide views the almost obsessive emphasis on writing business plans as a crutch.
When asked if he’s on a crusade to move academics away from so much focus on business plan writing he responds with:
The crusade I’m on is this: I don’t think that people deliberately set out to teach business-plan writing because they want to do harm to their students. It’s really that they don’t have an alternative set of educational materials that would fill up time and courses. My crusade is to try to figure out what the alternative should be.
At a very superficial level, it’s the idea that adaptation rather than planning is critical. To some degree, it’s a matter of socialization. I think you can sensitize people to the importance of adaptation. I think you can get people emotionally used to the idea that they will be wrong. Even successful people are wrong quite often. (Inc. October 2002)
Read the entire interview here.
The Different Types of Business Plans
Find out about the four types of business plans so that you write the right one.
Alternatives to the Business Plan
So what then if not a business plan? We recommend that you begin with a well thought out business model and an expanded executive summary of three to five pages. If these two items are not sufficient to win the cooperation of prospective strategic partners, customers, and investors, then nothing will be.
Still Want to Work on a Business Plan?
Here are some well formatted examples for your viewing pleasure.
Business Plan #1
Business Plan #2
Business Plan #3
What About Books on Business Plan Writing?
They are all pretty well the same since every plan must answer the same basic set of questions. You can in most cases find all the tips you need online for free. If you are determined to make a purchase, look up books by Rich Gumpert. You can’t go wrong with his advice.