Hundreds of years ago, Magellan, Cabot and Drake explored the world. Their successors, Gates, Page, and Cubin have become the explorers of our new world. Like their metaphorical forefathers, these modern day explorers choose a destination, set a waypoint and set off, constantly retooling and updating their map as they go.
Creating a business plan is a critical step in any new business venture. Would you trek across the country, from Montreal to Victoria, without a map? Would you build a house without a blueprint? Would you bake a cake without a recipe? While some might answer yes to all three of these questions, I would be reluctant to be their travel partner, live in their house or eat their cake.
I receive questions from entrepreneurs daily and the best ones are answered on my blog (www.SeanWise.com). Some questions however, are of such importance that they need to be addressed in a larger forum. "Do I need a business plan?" represents one such question. The short answer is yes, unequivocally yes! You need a business plan for your venture, whether it is big or small, a startup or global player, raising money or bootstrapping. You need a plan.
A business plan is a comprehensive statement that includes the objectives of your business and how you intend to achieve them. Unless you are working alone (even then, I think you need a plan), have no need for outside capital and have not prioritized growth and expansion, you need to write a business plan.
The Top 5 reasons why you need a business plan:
1. Creates a common starting point:
By its very nature, a Business plan is a concise statement indicating the current stage of your business. . If done correctly, it will contain all the information outside parties, such as investors, future employees and bankers, will need to make a decision with regard to your venture. The Business Plan, allows your reader to quickly review the key areas, such as management, technology, customers, industry metrics and the financial model. By using a standardized format, readers are able to easily identify your venture's key metrics, models and performance indicators. Without a plan, stakeholders have to rely on the oral representations of management or worse yet, have to review hundreds of documents themselves, before gaining confidence that management is "up to speed."
According to Benoit Hogue from Propulsion Ventures, a business plan is not so much the document itself, but all of the material and thought that goes into creating the document: "Founders should see the business plan as a collection of blocks (i.e. a budget, a product Roadmap and white paper, marketing plan, etc). These blocks when put together really synthesize the entrepreneurs' overall thoughts on the venture."
Not only does it provide a one stop shop for the vital information stakeholders require, but a well written business plan gives stakeholders a common place to start a dialogue, which is extremely important if you are looking for external parties to buy into your venture.
2. Sets the goals & shares your vision:
How do you know where you are going or even when you have arrived, if you do not set goals? Going back to our earlier example, of trekking across the country, from Montreal to Victoria without a map, the business plan not only informs your route, but also specifies the destination or "waypoint." Without your final waypoint, you cannot possibly plot your journey. In fact, until you set such, you should not even attempt your endeavour. The same is true for business. If you do not have goals, how will you plot your course? Stephen Covey, who sold more than 15 million copies of his book, The Seven Habits of Highly Effective People, said it best when he named goal setting (i.e. Begin with the End in Mind), as the second required habit in his seminal guide to success. He knew that the true role of management is to do just that, manage the business. This necessitates setting goals and tracking the venture's progress toward meeting those goals.
