Do I need A Business Plan? - FAQ

FAQ: I am in the very early stage of considering starting my own business; do I need a business plan?

Let me be really clear about this.

Yes you do.OK, I'm a consultant so you likely expected that answer. Let me explain.

But first let's rephrase the question to "how detailed should the business plan be?". Quite plainly it needs to serve the needs of the person for whom it is written. If it is just for your use then details are less important, concentrate on the big picture.

I would suggest you begin by writing down the concept as if you were describing it to a friend (one who is not a banker!). What would you tell him; what do you think he would like to know?

I think he would like to hear about the product. Describe it to him. Don't worry about all the stuff experts say that should be in "the plan" - just describe the darn thing! Its your idea ... you probably have lots to say about it. Tell your story. Write until you can't think of anything more to say (at least for now). Then go back and read what you have written. Did you capture the essence of what your business concept is all about? Does it get you excited?

Go ahead and do a bit of editing. If you did not talk about the price you will be charging for your product add something about it now. Hopefully you described how you were going to place (distribute) your product in the market and how you were going to promote it to potential customers.

Congratulations! You have just completed the first draft of your first business plan. Still excited?

Reality check. I said first draft. A business plan is a living document and needs to evolve as it develops. What you have written is more accurately described as a draft marketing plan; the marketing plan is the fundamental building block of a business plan. At this stage you are more interested in describing the concept ... let others read your plan ... get their feedback. Continue to add to the plan as you answer their questions. 

If you are still convinced that the business idea is sound you are ready to move to the next phase of putting your plan in a more formalized form. The questions get harder and the answers are longer but now your entrepreneurial adrenalin should be kicking in. Check this website under business planning for a business plan framework that will help guide you.  

The key message of this blog is that business planning is essential but if you start in smaller steps you will be ready when it comes time to run.

My next blog will take a look at the question "I asked my bank for a business loan but they want to see my business plan first ... do I need to hire a consultant to write it?".

My answer may surprise you. Stay tuned.